Gold and Crude Oil have responded to the dollar strength and have retreated over the past few days (only a little in the case of Oil but significantly in Gold). There are considerable long positions still in many commodity markets and if the perception takes hold that the best has been seen then we could well see some really alarming price action in the coming months.
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Commodities Spread Betting, 24 Apr 08
Gold and Oil appear to be on opposite tracks at the moment as one surges ever higher and the other continues to struggle to maintain value. In a resource hungry situation, as we have at the moment, the price of a product that requires continuous renewal (Oil, Softs etc) is likely to be far more attractive than one that for all intents and purposes is eternal (Gold, Silver etc).
Only in times of financial turmoil will the attraction of Gold assert itself and with the end game in sight for the banks (with rights issues etc) there is a possibility that the Yellow Metal might just go all the way back from whence it came. Mind you that’s only a possibility as another crisis may well be around the corner.
Brent Crude Oil is now at $116.50 (another all time high) but we will need to get through the $116.70 level which has been something of a barrier for the last three days. There was an attempt at a small pull back yesterday, as there have been on odd occasions over the past three weeks, but once more the buyers beat off the weakness with some ease after the inventories number in the States disappointed.
Commodities Spread Betting, 23 Apr 08
Crude Oil continues to power higher and with the news that the emerging economies have overtaken the US as the biggest users of the black stuff it is not hard to speculate that markets will take us ever higher.
Commodities Spread Betting, 22 Apr 08
Gold continues to look weak as other commodities take up the reins but we are still very much looking towards the dollar for inspiration. Any strength or weakness from the greenback is likely to translate directly into Gold Prices.
Oil...Going up, staying up, staying painful. Over 100 quid to fill up my gas guzzler the other night. Will have to raid the kiddies piggy bank.
Commodities Spread Betting, 21 Apr 08
Against the Yen the dollar spread betting market is back at the levels of this time last month at ¥103.69 - ¥103.71. In the mean time it managed to fall all the way to ¥95.75. It has been this recovery from the lows that has caused the fallout in Gold as Far East valuations have slipped. The JPY / USD cross is eying the ¥105.00 level as the major resistance as this was where it held up on the way down.
Crude Oil remains tight with prices at all time highs (and seemingly making new ones every day). It is tempting to suggest that at current levels the sheer expense should have its own braking effect. Fewer and fewer people and companies will be able to maintain consumption levels at these prices which should (?? Perhaps) reduce demand enough to create a counter move. The news that hedge funds are big buyers probably means the exact opposite. They would only let this type of information leak out if they were long and looking to get out.
Commodities Spread Betting, 17 Apr 08
If the price of many staple products does not fall from current levels the implications for growth and stability is not good. As governments run out of money so the food and fuel will disappear and the consequences will be dire.
Brent crude oil is now above $112 and there is no slackening of demand. A small pull back yesterday afternoon was swiftly smashed into submission and the price went from £1.50 cents down to close £1.10 cents up. As we are in uncharted territory at the moment all we can do is speculate as to how far things will go. As always they will probably go much further than anyone suspects. I, personally, hope not but fear so.
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Commodities Spread Betting, 16 Apr 08
There’s little in the way of economic data today, but interestingly last night’s release of the FOMC minutes gave a very interesting reading. A few members of the committee called for a smaller cut than the 0.75% the Fed made on 18th March. It seems that, as with our clients, even the Fed is finding it difficult to find common ground to try and steer their economy out of trouble. With Crude Oil prices hitting yet another record high overnight the majority of the Fed are brushing the inflation problem under the carpet for the time being. It’s easy to see now why the UK’s central bank is so reluctant to cut rates when inflation shows no signs of abating.
Our (June) Brent Crude Oil spread is currently $111.34 - £111.39 (note that this market closes on 15 May 2008)
Dollar weakness continues to be the theme in currency markets with the Euro around $1.5840 and looking like it wants to test record highs of $1.5900. Even Sterling is a little stronger against the Dollar bouncing off the support mentioned yesterday. It looks like it’s fighting hard against the euro too. EU countries must be praying for the trend to change as their currency has got so expensive that they’ll really be starting to feel the pinch. But when you look at the charts it’s difficult to see where the current bull run will end.
Gold is still hovering around the $930 mark this morning with the Gold Rolling Daily spread betting market at $929.3 - $929.8.
Commodities Spread Betting, 14 Apr 08
Gold is lower this morning around $921. Bullion actually hit a low of $914 in the Asian session. The dollar's little recovery against all the other majors has led to a little pressure on metal prices but the feeling in the market is that the trend is not over.
Crude Oil hit a new high after a drop in inventories and news that OPEC has sneakily cut production. The Energy Information Administration warned that the oil market was tight and that prices would average over $100 a barrel this year. Brent Crude finished the week at $107.85, a rise of $3.
'Commodities Trading April 2008' by DB, updated 25-Apr-08
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