Spread Trading Commodity Futures Market Review
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The Spread Trading Commodity Futures Market Review with quick and simple answers to common commodity futures spread trading questions:
Spread Trading Commodity Futures Market Review, 18 May 2012
Gold's safe haven status was clear in yesterday's commodities trading, with the precious metal posting one of its highest gains for the year.
The boost came from the extremely poor Philadelphia Fed manufacturing figures, which struck a chord as the market was not expecting a weak reading.
The $35 gain to $1,573.0 followed on from heavy selling earlier in the week as gold was weighed down by a rallying US dollar. Currently the precious metal is trading at $1,574.
The price of crude oil continued its decline yesterday by moving in the opposite direction to gold after the weak US manufacturing figures.
As the fundamental picture begins to suggest that there could be a harsh contraction in economic activity, the bears seem happy with the adage 'Sell in May and go away'. Currently, UK crude oil futures are trading at $106.76.
Spread Trading Commodity Futures Market Review, 17 May 2012
In commodities trading, yesterday gold hit new lows for the year at $1,527 an ounce before staging a modest comeback to close at $1,540.
The precious metal initially saw downside pressure as Greek turmoil kept safe heaven flows going into the US dollar. However, the FOMC minutes hinted that, given the state of the global economy, the Fed was becoming more open to another round of easing. This sent the dollar down and gold up.
The price of crude oil continued its downward trajectory yesterday. Traders factored in further supply increases and diminished global demand.
US crude oil also fell as inventories increased by 2.1 million barrels against an expected increase of 1.4 million barrels.
Spread Trading Commodity Futures Market Review, 16 May 2012
Gold continued to fall as traders dumped risky assets and piled into the safety of the US dollar. The gold spread betting market traded as low as $1,541 an ounce.
With little technical support seen until $1,531, and no turn around in Greece on the horizon, the downward trend looks set to stay firmly in place.
Dollar strength and increased supply data from the API kept the downward pressure on crude oil prices. The June contract is now firmly below the $93 level.
Data from the American Petroleum Institute showed that supplies have surged and traders are now re-pricing expectations for today's EIA supply data.
Spread Trading Commodity Futures Market Review, 15 May 2012
Gold prices suffered yesterday, falling $21.84 to trade at $1,557 an ounce, as risk aversion sent traders piling into the dollar.
Gold had previously been the asset which traders jumped into during moments of uncertainty. However, it has recently caught some traders off guard by recoupling with other commodities and returning to its inverse relationship with the dollar.
Crude oil made fresh lows for the year yesterday, shedding $1.41 to close at $94.20. Sentiment remains sharply negative and it doesn’t look like this will be changing any time soon.
With turmoil in Europe and slowing Chinese growth, demand for the black gold is set to remain weak.
In addition, mounting supplies from OPEC and expectations of another increase in US stockpiles, are keeping crude oil futures on a downward trajectory.
Spread Trading Commodity Futures Market Review, 14 May 2012
Gold futures continued to slide on Friday as risk aversion sent more traders fleeing into the safety of the US dollar.
The recent rush into dollars has seen the gold market reach new lows for the year.
Spot gold also fell 0.8% to $1,580.25 an ounce, shedding 3.7% on the week. This morning that weakness is continuing, with the precious metal at $1,570.
US crude oil futures continue to hold below the $96 level. Prices are being pressured by the slow down in China, turmoil surrounding Greece and the news from OPEC that supplies are 8% higher than consumer demand.
With more than ample supplies and negative cues in the global economy sapping demand, the price of crude looks set to remain under pressure for some time.
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Spread Trading Commodity Futures Market Review, 11 May 2012
Buyers returned into the gold futures market yesterday, albeit at a cautious pace. They pushed the price of the precious metal higher and interrupted a streak of three consecutive declines.
However, the gain of $2.42 to $1,592.42 hardly changed anything in the overall downside trend, despite some better news coming out of Greece.
Investors could now be trying to assess how long it will take for gold to be back in favour.
The price of US crude oil futures saw a timid rebound of $0.63 to $97.08 yesterday. This was, by and large, driven by a rally in the global shares spread trading markets, coupled with a slightly weaker US dollar.
It might also be the case that, after the steep fall from a high of $106.43, the market could have been expected to take a breather.
Nevertheless, the short term trend remains firmly bearish, so yet another attempt to break convincingly below $96.00 could be on the cards.
Spread Trading Commodity Futures Market Review, 10 May 2012
Yesterday, investors discarded gold and looked for safety in the US dollar and Japanese yen.
It seems that the precious metal has lost some of its safe haven appeal lately, however it will be interesting to how it performs if Greece leaves the euro.
Could there be forced selling to cover margin calls elsewhere, or will there be a wave of buying as a hedge against market turmoil?
For now, gold has moved below $1,600.00, losing $16.33 to $1,588.86.
The price of US crude oil fell in early trading on fears of an escalation in Greece's debt troubles. However, a mixed bag from the Energy Information Administration's weekly inventories report somehow offered a late recovery.
From a technical analysis point of view, we did have another test of the support just below $95.50. Although a recent low was posted at $95.17, the market saw bargain hunters pushing the price back up. Overall, the US crude oil market lost $0.57 to $96.81.
Spread Trading Commodity Futures Market Review, 9 May 2012
Mirroring the sell off in equities and the euro, gold also posted a steep decline as the developments in the Greek political arena threaten to reignite the European debt crisis.
Sentiment is becoming more and more pessimistic. Even gold’s safe-haven status isn’t enough to attract investors, they are heading for the US dollar instead.
The drop of $33.57 to $1,604.39 took the daily gold market through support at $1,612. At the time of writing, the metal is below the psychologically important $1,600 level at $1,591.
Besides the political turmoil in Greece, on Tuesday, we also had the Saudi Oil Minister Ali Naimi saying that oil prices were too high.
That added downward pressure to the US crude oil price which continued its plunge to $97.01, 95¢ lower for the session.
From a technical point of view though, it was the second time US crude oil prices found good support around the $95.50 level and rebounded. Although another test looks underway watch out for repeated failures to break the support.
Spread Trading Commodity Futures Market Review, 8 May 2012
Gold also remains in recent trading ranges, albeit near the bottom. For those of you who love long-term momentum, the last two big rallies failed to make new highs. This has not happened for some time.
It seems as though previous peaks are getting harder and harder to overcome. That said, there also seems to be virtually no appetite for selling below the $1600 level.
With the price at $1626, we can anticipate buyers coming in very soon. It will be interesting to see whether they can achieve the same results as in previous attempts.
Price Update:
- Brent Crude Oil / UK Oil (June) closed yesterday at $113.16
- WTI Nymex / US Oil (June) closed yesterday at $97.94
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Risk Warning: Spread betting and CFD trading carry a high level of risk to your capital and you may lose more than your initial investment. Spread betting and CFD trading may not be suitable for all investors. Only speculate with money that you can afford to lose. Please ensure you fully understand the risks involved and seek independent financial advice where necessary.
'Spread Trading Commodity Futures Market Review' by DB, updated 18-May-12
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