After the sell-off during previous week, global commodities market witnessed a slight rebound in prices last week following the parliamentary approval of Greece's austerity measures. While oil prices recovered, base metals registered strong gains.
Precious metals gold and silver slipped, while the bearish USDA acreage and stock report pushed corn (maize) prices down taking wheat and soyabean along.
The June instalment of the PMIs provided comfort for the nervous market, an expert commented adding the US PMI surprised by rising in the month, while Chinese data showed a welcome combination of slowing (not crashing) growth and moderating price pressures.
Despite these developments, uncertainties in the financial market have actually worsened. There is outflow of investment from commodity market. As much as $7 billion from commodity market investment was withdrawn during May, a trend that is causing anxiety. De-risking is currently turning out to be the norm. Stricter regulation of the derivatives market including tightening margin requirement is seen impacting the investor sentiment.
Concerns over global growth, inflationary expectations and currency market dynamics are sure to continue to underpin commodity price movements. Weather is a huge uncertainty for agriculture. In the event, caution is advisable.
Gold: Although the yellow metal continues to hover around $1,500 an ounce due to seasonal demand weakness, the precious metals complex showed mixed performance last week reflecting the overall mood of the commodities market. Gold and silver slipped by around 2-2.5 per cent through the week, while platinum and palladium rose. On Friday, in London, gold PM Fix was at $1,483/oz, down 1.5 per cent from the previous day's $1,506/oz.
Silver followed suit, with Friday AM Fix at $33.85/oz, down 3.3 per cent from the previous day's $35.02/oz. Despite short-term weakness, gold continues to find support from a broader positive external environment. Investor interest is key to price movements. If investor interest wanes, prices will come under pressure, albeit temporarily. However, at lower prices physical demand will be supportiveAll information on this website is for educational purposes only and is not intended to provide financial advise. Any statements about profits or income, expressed or implied, does not represent a guarantee. Your actual trading may result in losses as no trading system is guaranteed. You accept full responsibilities for your actions, trades, profit or loss, and agree to hold MinKL Invest harmless in any and all ways.
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