Commodities & Precious Metals Weekly Report: Sep 9
Posted:
Key points
Energy prices were flat to slightly lower last week with the exception of natural gas prices. Crude oil prices edged lower 0.2%, gasoline prices fell 0.5% and heating oil prices rose 0.2%. Natural gas prices fell 9%.- Grain prices were mainly higher. Wheat prices rose between 6% and 7%, corn prices increased 3%. Soybean prices fell 1%.
- Precious metal prices finished the week higher. Spot gold prices increased 0.4%, spot silver prices rose 4.5% and spot platinum prices gained 4.9%.
- Base metal prices were mainly higher as well. Zinc and copper prices increased 1.1% and 4.5%, respectively and nickel prices jumped 12%. Aluminum prices decreased 0.5%.
- The Bloomberg Commodity Index decreased 0.4%. Losses in the energy sector (driven mainly by sharply lower natural gas prices) were partially offset by gains in the base and precious metals sectors and the grains sector.
- $806 million outflows from commodity ETPs last week. Gold (-$603m) and broad commodity (-$417m) outflows were partially offset by crude oil ($141m), silver ($31m) and energy (ex-crude oil) ($33m) ETP inflows.
Commentary
After 3 weeks of declines, stock indexes moved higher last week. The move higher occurred despite continued strong, inflation-fighting language from Fed Chairman Powell Thursday and a 75bp hike by the ECB Wednesday. Stronger-than-expected earnings reports combined with another week of decreasing jobless claims and a better-than-expected ISM Services PMI seemed to bolster investor sentiment in the face of recession/slowing growth concerns. The 10-year Treasury continued its move higher, increasing 12bps with 10-year real rates rising 14bps and 10-year inflation expectations falling 2bps. For the week, the S&P 500 Index gained 3.7% to close at 4,067.36, the Nasdaq Composite Index climbed 4.1% to 12,112.31, the Dow Jones Industrial Average rose 2.7% to 32,151.71, the 10-year U.S. Treasury rate rose 12bps to 3.31% and the U.S. dollar (as measured by the ICE U.S. Dollar index - DXY) weakened 0.6%.
Weaker on global recession fears and continued Chinese Covid-related restrictions, WTI and Brent crude oil prices fell over 5% Wednesday. The fall followed sharply higher prices Monday (US markets were closed for Labor day) precipitated by an OPEC+ announcement it would reduce production by 100,000 barrels/day. Oil prices climbed markedly higher the remainder of the week, however, bolstered by Russia’s threat of halting oil and gas exports if price caps were imposed. For the week, WTI and Brent crude oil prices were only marginally lower. Natural gas prices tumbled early last week, pressured by greater-than-expected European storage levels and milder temperatures in the US. Natural gas prices down almost 11% through Wednesday, ended the week down a little over 9%.
An up-and-down, holiday-shortened trading week for gold prices. Pressured by rising real rates as central banks across the globe acted to stem elevated inflation levels, gold prices rose as the U.S. dollar came off its recent highs and as the ECB increased rates 75bps with promises of more to come. Spot gold prices ended the week about 1/3 percent higher. Spot silver prices, up 4.5% at week’s end, benefited from rising base metal prices as well.
Copper prices moved higher last week buoyed by Chinese statements of increased infrastructure spending, tight supplies and a weaker U.S. dollar. Strike-related production concerns in Chile also supported prices. Similarly, nickel prices, up 12% on the week, benefited from falling inventory levels, expectations of stronger demand and a weaker U.S. dollar.
Wheat prices moved higher last week, bolstered by Russian threats to block shipments after sharply criticizing a UN brokered Ukrainian export deal. Wheat prices also were affected by tensions surrounding Ukrainian nuclear energy facilities. Corn prices were also higher, rising on the back of Midwest harvest shortfall expectations. Soybean prices, lower on the week, suffered from Argentina subsidies to soybean farmers increasing expectations of Argentina soybean exports.
Coming up this week
CPI leads off the data-week on Tuesday followed by PPI Wednesday and then retail sales Thursday and Consumer Sentiment Friday.- CPI on Tuesday.
- PPI on Wednesday.
- Jobless Claims, Phil. Fed Mfg Index, Retail Sales and Industrial Production on Thursday.
- Consumer Sentiment on Friday.
- EIA Petroleum Status Report Wednesday and Baker-Hughes Rig Count on Friday.
Who is Jeff Klearman in our research team? Jeff has over 20 years experience working as a trader, structurer, marketer and researcher. Most recently, Jeff was the Chief Investment Officer for Rich Investment Services, a company which created, listed and managed ETFs. Prior to Rich Investment Services, Jeff headed the New York Commodities Structuring desk at Deutsche Bank AG. From 2004 to 2007, he headed the marketing and structuring effort for rates based structured products at BNP Paribas in New York. He worked at AIG Financial Products from 1994 to 2004 trading rates-based volatility products as well as marketing and structuring. Jeff received his MBA in Finance from NYU Stern School of Business and his Bachelors of Science in Chemical Engineering from Purdue University.
