Commodity Update 22 March 2013

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Commodities Trading: 22 March 2013

The banking crisis in Cyprus is far from being resolved. If anything, it is getting worse. So in the commodity markets, it came as no surprise to see gold futures edging higher yesterday.

The precious metal rose $8.2 to $1614.3 on safe haven demand. Gold's short-term trend is now turning bullish.

Another set of positive US economic data failed to spur fresh demand in the energy sector as market participants were paying closer attention to Europe. It shows how quickly things can turn after reports of dropping oil supplies.

WTI crude oil futures prices lost 97¢ to $92.38, effectively giving up the previous day's gains. There was also extra pressure from a higher US dollar.



Commodities Trading: 21 March 2013

In commodities trading, after rallying for four days, profit taking had put gold prices on the back foot even before the Fed's statement.

Chairman Ben Bernanke's speech then triggered renewed optimism in the global markets, mitigating some concerns over the Cypriot banking crisis.

That added to gold's woes, with the precious metal declining $7.4 for the session to $1,605.7.

WTI crude oil recovered $0.94 yesterday, finishing at $93.35, following the Federal Reserve's ongoing pledge to maintain the pace of asset buying to help 'substantially' improve growth and the job sector.

At the same time, we saw a surprise fall in the weekly crude oil stockpiles which was also a supportive feature.



Commodities Trading: 20 March 2013

Gold closed $7.3 higher at $1,612.1 yesterday, and is holding steady near a three week high this morning, after the Cypriot parliament rejected bailout terms involving a bank levy.

Investors have flocked to safe-haven gold in light of this new Eurozone crisis.

However, some feel that this support for the precious metal may not last in the longer-term as Cyprus is a relatively small problem compared to past issues concerning countries like Greece.

Downward pressure for gold comes in the form of attractive riskier assets like equities in an improving global economy. In addition, buyers are remaining cautious ahead of today's Fed meeting which could see some tightening of monetary policy.

Following the Cypriot rejection of a tax imposed on bank deposits, global markets went into a risk off mood and the energy sector was definitely no stranger to that.

US crude oil prices dropped $1.85 to $92.33, with the sharp sell off accentuated by a rush into the safety of the US dollar.

Energy investors should also be aware that today's FOMC meeting and weekly crude inventories are likely to help determine the short-term direction.



Commodities Trading: 19 March 2013

The gold spread trading market closed at $1,604.8 yesterday and is managing to keep its head above the $1,600 mark as investors remain nervous about the situation in Cyprus.

Safe haven interest in gold may have jumped, allowing the precious metal to approach a two and a half week high, but confidence that the global economy is improving has kept demand in check.

All eyes will be on the outcome of the Fed policy meeting on Wednesday where we expect to see more positive notes on the economy and little or no change in monetary policy.

A late recovery for the shared currency and indices also encouraged a comeback in crude oil, which had plunged steeply in early morning trading.

Overall, the price of a barrel of Nymex crude oil rose by $0.65 to $94.22 after rumours that the terms of the levy in Cyprus might be eased, at least for some savers.

Wednesday's FOMC meeting will be closely watched by investors for any hints about the state of the US economy which should also offer extra guidance for the energy complex.



Commodities Trading: 18 March 2013

Gold closed at $1,591.4 in the last session but has breached the $1,600 barrier for the first time in more than two weeks this morning after Cyprus' bailout package was unveiled on Saturday.

Depositors in Cypriot banks will have to share the cost of the latest Eurozone bailout and this new turmoil is driving investors to safe-haven assets like the precious metal.

Gold hit a high of $1,608.1 earlier today but has since retraced a little as investors tread with caution.

The energy sector saw some good news on Friday as another rally for US crude oil saw the market close $0.75 higher at $93.88.

Nonetheless, renewed concerns regarding Europe's debt crisis, as Cyprus considers a one off tax on bank savings, triggered a nosedive for oil prices last night.

It shows that, despite ongoing optimism for the US economy, sentiment can turn rather faster than previously anticipated.



Commodities Trading: 15 March 2013

Gold initially moved down on the back of yet another good set of results for the US economy, only to recover on bargain hunting and finish $2.4 up at $1,589.6.

The $1,600 mark remains elusive for now, with the daily gold analysis still pointing sideways.

As fewer Americans applied for jobless benefits last week, energy investors were encouraged to go long of crude oil as demand for energy is predicted to rise.

Consequently, US crude continued its rebound from $90, gaining $0.70 to $93.14 a barrel.

The short-term trend has now turned positive, with oil analysis showing that the market price has crossed above the 9 and 14 day moving averages.



Commodities Trading: 14 March 2013

Just when commodity investors thought that gold might make an attempt on the $1,600 mark, strong US retail sales figures sparked fresh selling for the precious metal.

The appetite for risk assets is still dominating spread trading market sentiment so gold dropped $5.1 to $1,587, although the short-term trend continues to point sideways.

Yesterday's weekly US oil stockpiles report indicated a build of 2.6 million barrels compared with estimates for a 2.3 million barrel gain.

That kept crude prices in check, with Nymex finishing rather unchanged at $92.47 despite a sharp rally in the US dollar and the ongoing climb for shares.



Commodities Trading: 13 March 2013

With Europe and Asia trailing the US in terms of economic data, speculation that the central banks are still focused on stimulus appears to give gold a lifeline.

Yesterday, the precious metal recovered $11.2 to $1,592.2, although it's not yet clear whether that is just a stop in the recent dive or the beginning of a more meaningful rebound.

The price of WTI crude oil extended its recent gains on the back of heightened expectations that oil stockpiles are on the decline.

In addition, the bulls were tempted to ride the upward momentum once the market price moved above the short-term moving averages.

As a result, we saw a rise of $0.66 to $92.58 for the fourth time in a row.

The weekly inventories report due to be released later could accentuate the advance or conversely bring renewed plunge in prices.



Commodities Trading: 12 March 2013

Gold closed $3.5 higher at $1,581.2 yesterday, settling just over the $1,580 mark on fears over the Eurozone.

However, we have yet to see a major catalyst for breaking out of this narrow trading range as investors divert their attention to riskier assets such as equities.

For example, the Dow Jones hit another record high for the fifth consecutive session yesterday, with the index having gained 10.3% during 2013.

In comparison, the precious metal has seen a drop of almost 5% during the same period.

Crude oil prices were buoyed by a slightly higher stock market and a lower dollar yesterday.

WTI crude added to its timid rebound after falling to below $90 level, rising $0.31 to $91.96 a barrel.

The fact that, despite ongoing good news for the US economy and sharp rallies for equities, crude oil struggled to make significant gains is a testament to the current high level of supplies.



Commodities Trading: 11 March 2013

On the one hand, the world's biggest economy is on the mend and that could bring downside pressure for gold as investors move into riskier assets.

However, on the other hand, with unemployment still above the target, we may see yet more quantitative easing from the Federal Reserve and that could support the precious metal.

As a result, the gold spread trading market finished nearly flat on Friday at $1,577.

With the US economy creating more jobs than expected, this immediately suggested that we could see more motorists on the road, pointing towards an increase in demand for crude oil.

Therefore, despite a stronger dollar, US crude oil prices continued their slight rebound for the second day in a row, gaining $0.42 to $91.80 a barrel.


By Simon Denham, 22 March 2013


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