Weekly Commodity: Gold touched its lowest price level in seven weeks

Weekly Commentary            


Sharp recovery in the Greenback stole some strength of commodities such as bullion counter. Energy counter trapped in range. Industrial commodities gave some strength to the commodity space. The dollar inched up against a basket of its peers after data shed more positive light on the U.S. economy, although sagging Treasury yields tempered the greenback’s gains. Gold touched its lowest price level in seven weeks on Tuesday after strong U.S. economic data reinforced expectations of another interest rate rise in the United States this year and pushed the dollar and U.S. bond yields higher. The net long position of hedge funds and money managers in COMEX gold rose nine-fold in the two months to mid-September, helping push prices higher, but has since fallen sharply. WTI slumped below US$50 after a brief rally, as EIA data about U.S. crude oil exports showed these had hit a record-high of 1.98 million bpd. This is the highest weekly average since exports were once again allowed, after a fourdecade ban. Spread between WTI and Brent increased. This big arbitrage has incentivized exports. As refiners return, the WTI-Brent spread will narrow. Copper futures saw massive jump on Thursday after an earthquake in the main copper producing region of Chile prompted traders to chase the metal higher. Chile accounts for nearly 30% of the world’s copper output and some of the world’s biggest mines are located near the city of Calama in the Antofagasta region where the 5.4 magnitude earthquake occurred. Zinc saw huge upside on supply tightness and cancelled warrant issue.

Mentha oil prices were up in futures markets as speculators enlarged their positions due to pick up in demand from consuming industries in the domestic spot market. Furthermore, tight stock position following restricted arrivals from major producing regions of Chandausi in Uttar Pradesh also supported mentha oil prices uptrend. It was a strong week for cotton complex though international market was weak on ample of supply. Guarseed was weak while its derivative guargum traded sideways. Chana prices crashed on cheap pulses availability in the market. Wheat prices rose on talk of increase in import duty. In spices it was only coriander which performed well. Oil seeds and edible oil counter performed mix.

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