UK Commodity Futures Spread Trading
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The UK Commodity Futures Spread Trading review with quick and simple answers to common commodity futures spread trading questions:
UK Commodity Futures Spread Trading, 1 June 2012
Gold prices finished slightly lower yesterday, losing $2.77 to $1,559.8, as spread betting investors remained concerned by the threat of deflation.
Since the beginning of May the precious metal had followed the euro lower. However, in the last two weeks the price of gold seems to have stabilised above the $1,550.00 level. This has come despite the fact that both the EUR/USD currency pair and the crude oil market have continued to decline.
There will be no chance for a breather in the energy sector as long as US economic data continues to fall short of expectations.
On top of that, the weekly crude inventories statistics released yesterday showed a higher than anticipated build in crude stocks.
As a result, it came as no surprise that the price of Nymex crude oil touched a new low for the year, settling $1.02 down at $86.53.
UK Commodity Futures Spread Trading, 31 May 2012
For once gold prices moved higher, gaining $9 to $1,563 amid signs that the European debt crisis is worsening.
The metal has risen despite the US currency seeing further strength, which should make the dollar denominated commodity look more expensive.
The fear factor may have played its part, encouraging investors to look for safety in assets other than the US dollar.
The energy sector really struggled yesterday, as the deepening debt crisis in Europe delivered further blows to the price of US crude oil.
The commodity saw a nosedive of $3 to $87.82, the lowest level for more than six months.
The fundamental picture, with plentiful supplies and stubbornly weak demand, is not helping matters either.
All eyes will be on Friday's US employment report as it could trigger an immediate reaction in crude oil markets one way or the other.
UK Commodity Futures Spread Trading, 30 May 2012
A stronger US dollar scared away any gold bulls yesterday, and pushed the market $20 lower to $1554.6.
What's interesting is that, over the longer-term, one can hardly discard the threat of inflation, given all the money that is being printed out of thin air.
Holders of gold would stand to be insured against the spectre of rising inflation should it begin to materialise.
Although a meaningful rebound in WTI crude prices is overdue, it is also hard for bargain hunters to step in as long as the US dollar sees ongoing demand.
Yesterday, the shares markets posted a recovery but that failed to convince buyers of crude oil.
As a result, WTI prices closed $0.35 down at $90.76, with investors possibly waiting for the NFP figures to give them extra clues on the short-term direction.
UK Commodity Futures Spread Trading, 29 May 2012
Gold traded in a tight range yesterday, finishing nearly flat at $1,574.4, as investors remained reluctant to commit too much ahead of Friday's Non Farm Payrolls report.
Although the precious metal seems to have stabilized over the last fortnight, after falling from around $1,670 in early May, it still hasn't given buyers a convincing reason to step in. We have yet to see any significant buying on the dips.
Stock markets provided very limited direction for the energy sector yesterday, so the price of US crude oil enjoyed a brief rebound on the back of a stronger euro.
However, it really was brief as fears over Spanish debt put the dollar in the driving seat and pushed crude oil back down.
Despite a very thin trading range, the session ended $0.25 higher at $91.11. Unfortunately it's too early to suggest that the bearish momentum has eased.
UK Commodity Futures Spread Trading, 28 May 2012
In the commodities futures markets, despite a slightly stronger US dollar, the price of gold moved up $14.4 on Friday, finishing at $1572.3. This helped the metal par some of its overall losses for the week.
Concerned that events in Europe might escalate at any moment, investors exited their previously short positions, especially ahead of an extended weekend in the US.
It was a draw in the energy sector, as the positive influence of better than expected US economic data was cancelled out by signs of problems popping up outside of Greece, i.e. in Spain.
The spread trading charts indicated a slightly higher close for the WTI crude oil market at $90.86, but that was inside the daily range.
As mentioned, today’s trading is expected to be thin, so watch out for any possible spikes.
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UK Commodity Futures Spread Trading, 25 May 2012
We saw an initial recovery in gold futures yesterday, on the back of a weaker US dollar, but that boost evaporated once investors fell back into a risk off mood.
Just as in previous sessions, gold acted less like a safe haven and more like any other commodity that is inversely correlated to the dollar. The precious metal finally closed the day $3 lower at $1,557.60.
At the time of writing, the gold market is at $1,562 but, despite breaking below its multiyear upward trendline, the $1,530-5 area is the major support level to watch. Gold has bounced off this three times in the past eight months and a break lower could really open the flood gates.
The price of US crude oil stopped for a breather yesterday, as bargain hunters joined the market and tried to push above the psychologically important $90.00 mark.
The session ended with an anaemic gain of $0.13 to $90.66, which hardly changes the overall bearish picture. If the US dollar keeps seeing safe haven demand, things could really turn ugly for buyers.
UK Commodity Futures Spread Trading, 24 May 2012
The continued flight into the safety of the US dollar put downward pressure on the whole commodities spectrum yesterday.
As a result, the gold market posted another decline, falling $6.52 to $1,560.7.
Unfortunately for the bulls, the precious metal has definitely lost some of its appeal as alternative asset. With inflation fears currently at the back of investors' minds, is the possibility of QE3 the only factor that could boost gold?
As if the crisis in Europe was not enough to scare energy investors, the weekly US oil inventories showed that supply is at a 22 year high.
Consequently US crude oil futures plunged again, this time crossing under the $90 level to close $1.64 down for the day at $89.90.
In fact the market even saw a fresh recent low of $89.29, last seen on 1 November, which shows how much bearish sentiment is currently in the energy sector.
UK Commodity Futures Spread Trading, 23 May 2012
The dollar strength extended the weakness in the gold market for the second day in a row as concerns over the Eurozone debt crisis remained in focus.
The precious metal lost $25.67 to $1567.20 as it became increasingly obvious that buying gold as a safe haven has been trumped by its inverse correlation with the dollar.
The rush into the safety of the US dollar triggered a sell off in Nymex crude oil prices yesterday, with the market finishing the session $0.98 down at $91.66.
Along with anxiety about the European debt crisis, there were fresh hopes that Iran and the West might come to an agreement.
Any such agreement would further reduce the need for the risk premium that is currently built into prices.
The US weekly crude inventories, due out later today, will be closely watched for any extra clues on the next possible direction.
UK Commodity Futures Spread Trading, 22 May 2012
Economic data comes in the form of UK inflation numbers this morning which are expected to rise month-on-month but fall year-on-year.
Even with the lack of growth in the UK economy, inflation is being propped up by high oil futures and the BoE's QE program.
Despite the recent correction in the price of crude oil, petrol prices haven't fallen from their record highs and it still costs an arm and a leg to fill up the car.
High inflation has been the bane of the UK consumer's life for the last few years as people have seen their real disposable income falling. It's little wonder that Marks and Spencer has seen such a huge drop in sales for the last year.
Gold closed marginally lower yesterday at $1,592.20 as investors struggled to find a reason to buy the precious metal.
At the G8 meeting over the weekend, world leaders failed to deliver a meaningful conclusion, despite expressing their support for Greece.
Although gold seems to remain a good hedge over the longer term, the short term picture looks a bit more unpredictable.
A rally in equities helped drive yesterday's rise in US crude prices, along with a Chinese commitment to boosting economic growth. A weaker dollar also played its part and so oil ended the day $1.30 higher at $92.57.
However, the candlestick charts continue to indicate that the overall trend remains firmly bearish. Investors will be closely watching the weekly US oil inventories for any indication of a change in the oversupply.
UK Commodity Futures Spread Trading, 21 May 2012
Gold continued its rebound on Friday, gaining $18.73 to $1,592.90 as bargain hunters came into the market.
The weaker US currency was the main reason behind the rally, as it made the dollar denominated gold market look cheaper.
It’s also possible that some investors took a second look at the Fed’s recent choices and decided that QE3 is still a possibility.
In the crude oil markets, it didn't seem to matter that the dollar was under pressure on Friday, even though this would usually support the price of black gold.
Instead, weak US economic fundamentals continued to dominate the energy sector, which was already spooked by fears over reduced European oil demand.
In the end, WTI crude prices fell by $1.38 to $91.48, but not before touching $90.93, the lowest point since 3 November last year.
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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.
'UK Commodity Futures Spread Trading' by DB, updated 01-Jun-12
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