Precious metals except for palladium moved higher on Wednesday as caution ahead of the ECB press conference due on Thursday boosted safe haven appeal of the commodity complex.
Gold climbed ahead of the ECB policy meeting scheduled on Thursday. Moreover, signs of strong physical demand continued to support the precious metal. At the same time, weak Eurozone’s data as well as firmness in greenback restricted an upward trend.
Silver edged up, tracking platinum’s gains. The grey metal drew strength from a 86% increase in 2013 American Eagle silver coins sales last month. However, solid greenback and soft global equities weighed on silver price.
Platinum rallied to a 16-month high on supply concerns from South Africa. Meanwhile, holdings in ETP backed by platinum soared to a record of 51.5 metric tonnes on Tuesday, indicating strong investment demand.
Palladium was the only loser amid profit taking after the price surged on worries over widening global deficit. Robust demand from automobile industry coupled with a fall in sales of Russia’s stocks are expected to widen global deficit.
Industrial Metals: Copper slides as Chile’s output surges
Industrial metals were bearish on Wednesday ahead of the ECB press conference scheduled on Thursday and China’s trade numbers due out on Friday. Meanwhile, worries over political instability in the Eurozone also weighed on the commodity group.
Aluminum slumped despite hopes for stronger demand. The major aluminum producers predict an increase in aluminum usage in automobile industry. At the same time, the light metal remained under pressure amid elevated LME stocks.
Copper traded lower on signs of rising global output. Production from Chile’s Escondida, the world’s largest copper mine, surged 31.6% last year. However, strong investment demand as well as a decline in LME stockpiles cut losses of the red metal.
Nickel dipped the most in three months on ample global production and a potential fall in demand. Experts predict China’s demand for nickel to weaken for the second consecutive year in 2013, according to Macquarie Group.
Zinc prolonged its losing streak on persistent surplus on the physical market and solid greenback.
Energy: Brent oil jumped after US inventory report
Energy futures were mixed on Wednesday after a release of the EIA crude oil inventory report. Ongoing concerns over political instability in Spain and Italy as well as caution ahead of the ECB policy meeting also weighed on energy prices.
Crude oil retreated after the EIA report showed slightly smaller than expected increase in the US crude oil inventories. US stockpiles rose 2.62 million barrels last week, missing forecasts of a 2.77-million-barrels gain.
Brent oil finished in green territory on hopes upcoming China’s trading figures will be positive. Adding to gains, the latest data indicated a decline of 315,000 barrels in Cushing stockpiles last week.
Natural gas jumped as updated weather forecasts called for abnormally low temperatures in the US. The Commodity Weather Group predicted a snowstorm in the Midwest and Northeast next week. Meanwhile, market players remained cautious ahead of the EIA inventory report due on Thursday.
Heating oil was the worst performer despite larger-than-expected decline in the US stockpiles. US inventories fell by one million barrels last week, compared to estimates of a 750,000-barrels drop.
Agriculture: Corn prolongs slump as USDA may raise stocks forecast
Farm commodities apart from wheat extended previous losses on Wednesday as investors focused on Wasde report due out on Friday. Speculation that USDA will revise up its grain inventory forecasts created heavy pressure on the commodity complex.
Wheat was the only gainer after weather forecasts showed rains expected this weekend are likely to miss the US main growing areas. However, weak demand for US exports and caution ahead of Wasde report capped gains.
Corn plummeted for fifth day in a row on speculation the USDA may raise its forecast for US stockpiles. US inventories may total 616 million bushels on August 31, compared to 602 million projected last month.
Sugar led losses in the commodity sector, sagging 2% on expectations of a third consecutive global supply glut. Global sugar production may exceed consumption by six million metric tonnes in the year starting April 1, reported Macquarie Group.
Coffee reached the lowest level in more than two years on concerns supply will outplace demand amid record crop in Brazil. Brazilian production is likely to jump 7.3% year on year in 12 months that started October 1.
EXPLANATIONS
Commodities
Gold - spot 995 fine gold
Silver - spot 999 fine silver
Platinum - spot platinum with minimum purity 99.95%
Palladium - spot palladium with minimum purity 99.95%
Aluminium - three-month forward contract on the London Metal Exchange
Copper - three-month forward contract on the London Metal Exchange
Zinc - three-month forward contract on the London Metal Exchange
Nickel - three-month forward contract on the London Metal Exchange
Crude oil - light, sweet crude oil active contract on the New York Mercantile Exchange
Brent oil - Brent oil active contract on the New York Mercantile Exchange
Natural Gas - natural gas active contract on the New York Mercantile Exchange
Heating oil - heating oil active contract on the New York Mercantile Exchange
Sugar - white sugar active contract on the Chicago Board of Trade
Wheat - wheat active contract on the Chicago Board of Trade
Coffee - benchmark Arabica coffee active contract on the NYB-ICE Futures Exchange
Corn - corn active contract on the Chicago Board of Trade
Indices
Dow Jones-UBS Precious Metals Subindex Total Return - commodity group subindex composed of gold and silver; the index reflects return on underlying commodity futures price movement
Dow Jones-UBS Industry Metals Subindex Total Return - commodity group subindex composed of futures contracts on aluminium, copper, nickel and zinc; the index reflects return on fully collateralized futures positions
Dow Jones-UBS Energy Subindex Total Return - commodity group subindex composed of futures contracts on crude oil, heating oil, unleaded gasoline and natural gas; the index reflects return on fully collateralized futures positions
Dow Jones-UBS Agriculture Subindex Total Return - commodity group subindex composed of futures contracts on coffee, corn, cotton, soybeans, soybean oil, sugar and wheat; the index reflects return on fully collateralized futures positions
Chart
SMA (20) - Simple Moving Average of 20 periods
SMA (60) - Simple Moving Average of 60 periods
Correlation - a statistical measure of the linear relationship of two random variables. It is defined as the covariance divided by the standard deviation of two variables
Indicators
Daily Ranked Price Moves - daily price changes in an ascending order for positive changes and in a descending order for negative or mixed changes
Monthly Ranked Price Moves - monthly price changes in an ascending order for positive changes and in a descending order for negative or mixed changes
