Commodity Update 9 November 2012

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Commodities Trading: 09 November 2012

Gold closed at $1,730.2 yesterday after trading flat. However, this morning, it's on track for its first weekly gain in a month as uncertain monetary policy prospects in the US have boosted the precious metals appeal.

This is in the shadow of a 'fiscal cliff' which consists of $600 billion worth of tax hikes and spending cuts that could sent the world's largest economy plunging into a deep recession.

The focus is on gold simply because many online spread trading investors believe that the Fed will further ease monetary policy to offset whatever impact the cliff may have on the economy.

This sentiment will not just benefit gold, but also golds other valuable cousin, silver.

Of course, the ongoing debt crisis in Europe, and prospects of their own stimulus, also assisted the gains and even boosted other safe haven assets such as the dollar and US treasuries.

In China, promising figures have shown a firm increase in demand for gold, rising by around 1% to a record 860 tonnes.

The WTI crude prices rebounded $0.46 to $84.97 yesterday, largely on the back of better-than-expected US jobless claims data.

At the same time, energy investors were encouraged by events in Europe where the Greek Parliament narrowly passed an important set of austerity measures.

Going forward, debates about the US budget and the European debt crisis are likely to remain the two major influencing factors in the energy complex.



Commodities Trading: 08 November 2012

Considering the violent sell-off across the board yesterday, gold held its ground rather nicely, closing nearly flat at $1,716.4.

On the one hand, the plunge in shares and a higher dollar put downside pressure on the precious metal.

But on the other hand, expectations that the world will continue to see more easing measures encouraged demand for the commodity as an alternative asset.

Although yesterday's weekly US report on crude oil stockpiles was in line with expectations, the price of US crude tumbled on renewed fears about negotiations in the political arena.

The re-elected President Barack Obama will now have to convince the Republican dominated House of Representatives about his fiscal plans.

A slumping stock market and a slightly higher dollar accentuated the decline of $3.87 to $84.52.



Commodities Trading: 07 November 2012

We saw a strong comeback for gold prices yesterday, with the market gaining $31.10 to move back above the $1,700 mark.

Investors re-entered the precious metal on the assumption that Obama will maintain easy US monetary policy, encouraging demand for gold as a hedge against inflation.

At the same time, the metal also saw its traditional supporters, a weaker dollar coupled with a stronger stock market.

Nymex crude oil posted a sharp advance yesterday on the back of expectations that gasoline supplies were hit hard by Hurricane Sandy.

The market gained $2.66 to $88.39 a barrel, crossing above the 9 day moving averages and breaking out of the last week's sideways range.

Today's Department of Energy crude oil inventories report is expected to show a build of 1.8 million barrels.



Commodities Trading: 06 November 2012

Gold is trading steady as investors await the results of the US Presidential election, closing at $1,678.7 yesterday.

The precious metal is currently at a nine week low and the people's choice of candidate in the world's largest economy will determine the direction of any monetary and fiscal policy.

These are exciting times as a Romney victory could mean higher interest rates whilst an Obama win could mean lower rates, which have historically helped the commodity rise.

However, some argue that the election result may only have a short-term impact as changes in economic prospects would not happen overnight.

The latest economic data has shown that the services sector is lagging in both the US and China, and the current stimulus measures cannot be easily reversed.



Commodities Trading: 05 November 2012

The gold market nosedived $38 on Friday, falling below the $1,700 mark, as an improved outlook for the US employment sector diminished the possibility of another expansion in monetary stimulus.

Investors also decided to move into a strengthening dollar, which usually accentuates any decline in the precious metal.

From a technical analysis point of view, the gold chart currently indicates that the short-term bearish trend remains intact.

Four days after Hurricane Sandy caused mayhem on the US east coast, a number of oil refineries remained shut, fuelling speculation that the stockpiles will continue to grow.

That overshadowed a better-than-expected US employment report which usually has a positive influence on the energy sector.

In addition, a stronger dollar combined with slumping equity markets to put further downward pressure on the US crude oil spread trading market, which closed $2.07 lower at $84.81.



Commodities Trading: 02 November 2012

A strengthening US dollar put downward pressure on gold prices yesterday which dropped $5.1 to $1,713.8.

Any sign that the US economy is improving by more than expected tends to send investors into the dollar and out of gold.

This might imply that deflation is perceived as a more immediate danger and that the inflation which the monetary stimulus packages are bound to bring will happen later on.

Renewed optimism that the US economy is on the right track spilled into the energy markets yesterday, pushing the US crude oil market $0.74 higher to $86.79 a barrel.

The climb was also supported by the release of the weekly inventories statistics which indicated a drop in crude stockpiles.

Of course, the employment numbers out later today are likely to offer further direction for the energy sector.



Commodities Trading: 01 November 2012

A sigh of relief after the devastating Hurricane Sandy attracted demand for precious metals as well as the whole commodities spectrum.

We may have also seen some bargain hunting considering gold's retracement towards the $1,700.00 mark over the last month.

Either way, the gold market jumped $10.5 yesterday to a close of $1,719.4, breaking above its 9 day moving averages.

As the oil refineries on the east coast of America resumed their activity, demand for crude oil increased.

As a consequence, Nymex crude enjoyed a second straight gain, rising $0.29 to $85.97 a barrel.

The US Department of Energy will also release its delayed weekly oil stockpiles report later today, estimated to indicate a build of 1.9 million barrels.



Commodities Trading: 31 October 2012

Gold is edging higher this morning after closing at $1708.4 yesterday when it looked likely that it would break a two-month winning streak.

A weaker dollar is expected to support gold prices, which are trading within a tight range as investors wait for key US employment data and next week's Presidential election.

In addition, political instability in China and the routine policy meetings of various central banks could also affect the gold market.

Prices are down by almost 3.4% in October, after climbing 4.7% in September when central banks around the world pledged to do more to stimulate their flagging economies.

US crude gained $0.41 to $85.63 yesterday on expectations of a recovery in oil demand after Hurricane Sandy hit the US east coast.

The majority of oil refineries are expected to resume their activity soon as the storm had less impact than anticipated.

Energy financial spread trading investors should also note that the US Department of Energy has postponed the release of its weekly crude inventories until tomorrow.



Commodities Trading: 30 October 2012

The gold market closed at $1,709 yesterday, after disappointing corporate earnings forced investors to sell their gold holdings to cover losses elsewhere.

Trading volumes of gold are expected to be light over the next few days due to the storm chaos in the US; historically, adverse weather conditions do not cause much price volatility in the precious metal.

The main focus will be on wider-reaching global events and the US Non-Farm Payrolls due out on Friday, which also may be delayed due to the hurricane.

The data released could influence the tight election between Obama and Romney, although the precious metal also has a knack of being resilient during political storms.

Hurricane Sandy made landfall on the US east coast around midnight with a number of oil refineries being shut down to avoid as much damage as possible.

Although the super storm was generally seen as a bullish influence for oil products, the price of crude oil itself has moved down as a glut of supplies remains unrefined.

This saw the WTI crude market plunge $1.10 to close at $85.24, with the intraday price reaching its lowest level for three months at $84.67 a barrel.



Commodities Trading: 29 October 2012

Gold climbed to close at $1,711.3 on Friday, having been slightly boosted after positive data in the US showed that economic growth had picked up in Q3.

All eyes will be on the precious metals performance once the US Non-Farm Payroll figures are released but, for now, the commodity is expected to tread carefully.

Rising concerns that Hurricane Sandy could disrupt refinery production on the US east coast kept spread trading investors nervous despite the clear bearish trend seen in the last week.

In addition, US growth data saw a pleasant surprise, showing an advance of 2%, which also brought buyers back into the energy sector.

This encouraged a gain of $0.13 in the price of Nymex crude oil, closing at $86.10. This morning, however, the market is seeing a little weakness, falling back to $85.40.


By Simon Denham, 9 November 2012


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