7 Jun 2013
Commodities Brief: The bulls are back for correlated commodity markets
FXstreet.com (London) - The markets have shifted and the commodities correlated to the price of the dollar, inflation and equities are benefitting.
Gold
After a retreat in equities from an almost five-year high and a weakening dollar spurred demand for bullion, gold rallied as high as $1,423.80 yesterday. Previously though, Gold imports had been recorded at 162 tons in May and import bill rose to $15 bn in the last couple of months in India. The increase in import duty came in a day no sooner than the Indian central bank acted to encourage domestic jewellers to buy only on a cash basis. For India, the commodity is diminishing dollar reserves and contributing significantly to widening of Current Account Deficit. The import duty was raised three times in recent years and second hike in six months, fundamentally this had been weighing on the price of the metal to curb imports. Gold imports were recorded at 162 tons in May and import bill rose to a staggering $15 bn in the past two months prompting government and the RBI to go for drastic measures. However, with the vast uncertainty in the markets severe technical damage has been done and there is a renewed bull market in place for the metal while stock market remain under pressure ahead of NFP’s coming up.
Crude
Uncertainty over US Federal Reserve's monetary stimulus and tensions in the Middle East had been limiting gains in crude oil to some extent while crude oil stock-piles fell 6.3m barrels last week, according to the data released by Energy Administration. However, the price has rallied significantly while the dollar has seen some poor data of late and drop in equity markets, resulting in a huge shift in dollar longs while traders are nervous ahead of NFP’s coming up later on today. The spot price in Brent rallied to $104.20, and at time of writing the price sits above support $103.80 at $104.07, up $1.27c on the yesterday. WTI sits just below resistance 95.20 and up $1.30 on yesterday ahead of NFP.
Gold
After a retreat in equities from an almost five-year high and a weakening dollar spurred demand for bullion, gold rallied as high as $1,423.80 yesterday. Previously though, Gold imports had been recorded at 162 tons in May and import bill rose to $15 bn in the last couple of months in India. The increase in import duty came in a day no sooner than the Indian central bank acted to encourage domestic jewellers to buy only on a cash basis. For India, the commodity is diminishing dollar reserves and contributing significantly to widening of Current Account Deficit. The import duty was raised three times in recent years and second hike in six months, fundamentally this had been weighing on the price of the metal to curb imports. Gold imports were recorded at 162 tons in May and import bill rose to a staggering $15 bn in the past two months prompting government and the RBI to go for drastic measures. However, with the vast uncertainty in the markets severe technical damage has been done and there is a renewed bull market in place for the metal while stock market remain under pressure ahead of NFP’s coming up.
Crude
Uncertainty over US Federal Reserve's monetary stimulus and tensions in the Middle East had been limiting gains in crude oil to some extent while crude oil stock-piles fell 6.3m barrels last week, according to the data released by Energy Administration. However, the price has rallied significantly while the dollar has seen some poor data of late and drop in equity markets, resulting in a huge shift in dollar longs while traders are nervous ahead of NFP’s coming up later on today. The spot price in Brent rallied to $104.20, and at time of writing the price sits above support $103.80 at $104.07, up $1.27c on the yesterday. WTI sits just below resistance 95.20 and up $1.30 on yesterday ahead of NFP.