Commodity Update 30 March 2012

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Commodities Trading: 30 March 2012

The gold spread trading market was slightly subdued yesterday but bounced back from a day low of $1644 to end the day at $1660.

Despite strikes among jewellers in India this week causing pressure on demand, the yellow metal is on track for a 6% quarterly rise.

It looks like traders are taking a bit of a breather after the commodity rallied to almost $1700 on the back of Fed Chairman Bernanke defending the low interest rate policy, signalling further monetary easing.

This morning gold is trading in a tight range at $1664, but we may see some movement later today after the Eurozone summit in Copenhagen.

Brent has seen its fair share of profit taking in the last few days as talk of tapping into strategic reserves has brought crude prices back from their highs.

This morning though the risk appetite has allowed the price of Brent to bounce strongly off the $122 level as it sits at $123.05 at the time of writing.



Commodities Trading: 29 March 2012

Gold couldn't hold onto its recent strength once again calling into question whether the bulls have the momentum to drag it back above $1700. This morning the precious metal is at $1662.

Talk of dipping into strategic crude oil reserves has served to bring the price of Brent crude oil back from its highs, but it still remains above $124 at $124.25 this morning.

In the past month crude prices have simply moved sideways and this isn't making petrol at the pump any cheaper.

With possible strikes in the UK next week people are likely to start stockpiling, acting upon the advice of the government, and soon we might see pumps run dry.



Commodities Trading: 28 March 2012

A funny old session took place yesterday as the market looked like it would continue the rally that commenced on Monday only to reverse the move higher slowly but surely throughout the session.

It was the oil and gas sector that dragged on the FTSE as a Total platform gas leak entered its third day.

Memories of BP die hard and investors sold other members of the sector in sympathy as Total's shares dropped over 6%, recording its worst fall since the crash of 2008.

The fact that the leak could take longer to resolve than the BP disaster is a worry in itself. The disruption to production could also have a knock effect for the natural gas spread trading market as other nearby rigs take precautionary measures and close down too.

Gold has been a beneficiary of Bernanke's comments in recent days as the precious metal made a run for the $1700 level but has given up ground taking it back to $1676 at the time of writing.

Major support around $1640 has just about kept the bulls interested, but the recent strength might be a little bear squeeze rather than an indication of the beginning of a more concerted move to the upside. Support is seen at $1671/63/55 while resistance is at $1697/1705.



Commodities Trading: 27 March 2012

Those investors spread trading on gold saw the biggest daily gain since late January in yesterday's session, with the precious metal touching a high of $1693.8. This came on Bernanke's comments stating that there was still a requirement for ultra-loose monetary policy to help reduce the current unemployment levels.

This gave the long awaited boost to the yellow brick which bulls have been so patiently waiting for since the recent bout of weakness crept in.

Support was also provided by the weaker dollar, so all in all the precious metal gained $26.2 to close at $1690.0. Currently, gold sits slightly offside at $1689.3.

Much like gold, crude prices were driven by the Fed Chairman's comments on the state of the US economy and the possibility of a further bout of quantitative easing.

Support was also provided by the ongoing supply concerns and tightening Western sanctions on Iran over the Middle Eastern nation's disputed nuclear programme. At time of writing, Brent crude sits at $125.37.



Commodities Trading: 26 March 2012

Crude oil prices remain a hurdle for the economy and they remain stubbornly high with the tensions in the Middle East ongoing.

The prices at the pump are really starting to bite; £100 to fill up most cars now is a considerable sum of money for cash strapped families that are reliant on driving everywhere.

It doesn't look like oil prices are going to crash at any point either and here in the UK a fuel duty rise is due in August.

Our George would have done his sums for last week's budget taking into account that duty is due to rise later on in the summer and so it will be almost impossible for him to reverse such a hike.

£100 to fill up the tank might soon become £125 or even higher at this rate.

As more news about Iran hit the news wires, demand for gold as a hedge in times of havoc was boosted.

This resulted in the yellow brick spiking on the commodities spread trading markets, closing the session at $1661.4, $18.4 up on the day, which also received assistance from the weaker US dollar.

It still seems that bargain hunters aren't using their full force after the drop from February 29th high of $1790.0, so will it need to break the resistance of $1670.0 before any real buying power is seen? Currently the precious metal is trading at $1665.9.

Crude prices were driven higher on Friday after a report showing Iranian oil exports had dropped by 300,000 barrels a day caused fear in the energy markets.

Investors showed that their belief was that it was just a matter of time before issues in the Middle East bared its teeth again and Friday's report showed that this was the case. At time of writing, Brent is trading at $124.86.



Commodities Trading: 23 March 2012

Gold too has seen some pressure to the downside on the commodities spread trading markets. You would have expected the recent risk aversion and dollar weakness to boost the price of the yellow brick, but there's been no such luck for the bulls.

It seems that some investors are starting to get a little nervous about the precious metals inability to return to its highs.



Commodities Trading: 22 March 2012

Gold spread trading investors were understandably cautious ahead of Fed Chairman Ben Bernanke's testimony to the US congress yesterday, as last time he spoke there was, for lack of a better word, disaster on the gold markets.

It's quite clear that bargain hunters haven't got strong confidence in the yellow brick and are struggling to unanimously get the price back up to recent highs.

The end result for gold yesterday was a loss of $1.7, closing at $1649.0, which has been lengthened this morning to a lower level of $1644.5.

After seeing little to no action, crude prices spiked yesterday after the US department of Energy released its weekly stockpiles report. This showed a surprise drop in crude inventories against estimates for an increase.

Towards the close of the session though it appeared energy investors started to doubt the strength of the rally and began selling off their positions. By the end of the day the price was near enough at the starting level.

Currently, the Brent crude oil spread trading market is sitting at 123.57.



Commodities Trading: 21 March 2012

The gold spread trading market still hasn't seemed to get back into rally mode yet even though a little dollar weakness has set in recently.

At $1653 this morning the yellow brick just can't seem to attract the buyers back following its sharp falls.

As it continues to hover below its 200 day moving average, a seed of doubt about the longer term upward trend might growing in the mind of the bulls.



Commodities Trading: 20 March 2012

Albeit a quiet session across the markets, gold still managed to gain some ground helped by a weakening US dollar. Another factor could have been holders of the yellow brick squaring off positions after the steep drop from the high of $1790.0 seen back on February 29th.

This morning's trade has shown market participants how quickly the tables can turn though and the gain of $5.2 to $1664.4 in yesterdays session has been eradicated, with the precious metal sitting down at $1648.2.

Energy traders were given a boost of optimism over the weekend when the International Monetary Fund's head Christine Lagarde voiced her opinion on the global economy, stating that she believed it was now past the worst point of the current crisis.

On the back of this, long positions in the crude oil market were increased as energy demand should closely follow the world's economic recovery. At time of writing, the rally has lost steam and Brent trades down at $124.60.



Commodities Trading: 19 March 2012

The expectation is that if the Fed avoids a third round of quantitative easing, favour will be back with the dollar in no time.

The gains in the price of gold were rather thin on Friday, with a weakening US dollar putting a low ceiling on any hike.

The reason behind the small rally was a proposed doubling in the import duty on gold to 4% in India, the largest consumer in the world, by the Finance Minister Pranab Mukhejee.

So by the end of the session, the gold futures trading market was showing an extra $1.9 at $1659.1, which at time of writing has been cleaned off, as gold is trading at $1656.2.

The usual suspects were behind the drive in crude prices on Friday, with a lower US dollar and higher equity markets helping black gold post a gain.

Additionally, energy investors kept optimistic by the news that US inflation was on track as consumer prices rose less than initial estimates. At time of writing, Brent crude trades at $125.23.


By Simon Denham, 30 March 2012


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