Momentum Bearish for Gold
Despite lingering concerns over the US ‘fiscal cliff’, some positive developments on the macroeconomic front last week including decision to release further aid to Greece and upside surprise in the US, China and Euro area manufacturing data helped improve the sentiment in the global commodity markets.
Across commodities, base metals were the strongest performers last week with prices rallying primarily not only because of positive macro news but also some short covering. In particular, aluminium prices rallied by 6.3 per cent on the week boosted by a deepening backwardation curve, as an analyst explained. Not to be left behind, nickel gained 6.2 per cent, while tin and zinc prices went up by 4.8 and 4.5 per cent respectively. Copper and lead prices rose by 2.8 per cent each.
The precious metals complex too performed well except for gold which came under heavy selling pressure to be down by 0.5 per cent over the week and settle at a two-week low. Despite its so-called safe haven status, the yellow metal failed to benefit from the risky asset rally last week. Palladium rallied by 4.2 per cent and silver by 2.6 per cent. The oil market, on the other hand, witnessed sideways trading in the absence of a directional catalyst. Although the market is well-balanced in terms of demand-supply fundamentals, it is buffeted by demand fears because of sovereign debt crisis and supply concerns due to geopolitical instabilities.
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Despite lingering concerns over the US ‘fiscal cliff’, some positive developments on the macroeconomic front last week including decision to release further aid to Greece and upside surprise in the US, China and Euro area manufacturing data helped improve the sentiment in the global commodity markets.
Across commodities, base metals were the strongest performers last week with prices rallying primarily not only because of positive macro news but also some short covering. In particular, aluminium prices rallied by 6.3 per cent on the week boosted by a deepening backwardation curve, as an analyst explained. Not to be left behind, nickel gained 6.2 per cent, while tin and zinc prices went up by 4.8 and 4.5 per cent respectively. Copper and lead prices rose by 2.8 per cent each.
The precious metals complex too performed well except for gold which came under heavy selling pressure to be down by 0.5 per cent over the week and settle at a two-week low. Despite its so-called safe haven status, the yellow metal failed to benefit from the risky asset rally last week. Palladium rallied by 4.2 per cent and silver by 2.6 per cent. The oil market, on the other hand, witnessed sideways trading in the absence of a directional catalyst. Although the market is well-balanced in terms of demand-supply fundamentals, it is buffeted by demand fears because of sovereign debt crisis and supply concerns due to geopolitical instabilities.
Read Full Article>>>