Gold bounces as dollar uptick halts after U.S. inflation data

By Ashitha Shivaprasad

(Reuters) – Gold resumed its climb on Wednesday after a knee-jerk retreat tied to the release of U.S. inflation data, as the dollar slipped with investors latching on to a slight cooling of consumer prices.

Spot gold was up 0.8% at $1,852.65 per ounce by 02:05 p.m. EDT (1814 GMT). U.S. gold futures settled up 0.7% at$1,853.70.

U.S. consumer price growth slowed in April as gasoline prices eased off record highs, suggesting inflation has probably peaked, though it is likely to stay hot for a while and keep the Federal Reserve raising interest rates to cool demand.

Helping gold advance, the dollar index, which initially strengthened on the CPI data, edged down 0.1%.

“The market saw the print and went ‘SELL, SELL, SELL.’ But gold has since bounced back with the thinking that the data is higher than expected, but not horrifying,” said Tai Wong, an independent metals trader in New York.

“The Fed won’t get more hawkish with this report, but definitely won’t ease off either.”

U.S. central bank officials on Tuesday fortified their arguments for the swiftest series of rate hikes since at least the 1990s to combat inflation.

“Overall, gold hasn’t been a bad investment. It’s been holding a fairly tight range, I’d much rather own gold than Nasdaq, or Bitcoin,” said Phillip Streible, chief market strategist at Blue Line Futures in Chicago.

Although gold is considered a safe haven from inflation, rising U.S. interest rates increase the opportunity cost of holding bullion, while boosting the dollar, the currency in which gold is priced.

“We expect (gold) prices to revert to taking cue from real yields as the year unfolds, encountering downside pressure in H2 but remaining elevated relative to historical levels,” said Suki Cooper, an analyst at Standard Chartered.

Spot silver gained 1.6% to $21.58 per ounce, platinum climbed 3.7% to $999.33, while palladium eased 1% to $2,044.17.

(Reporting by Ashitha Shivaprasad and Arpan Varghese in Bengaluru; Editing by Krishna Chandra Eluri and Kirsten Donovan)

Daily Gold News: Wednesday, May 11 – Gold Price Bounces From New Low

Gold Price Recap

The gold futures contract lost 0.95% on Tuesday, May 10, as it extended its Monday’s decline of 1.3%. Gold was the lowest since mid-February yesterday. It retraced almost all of the February-March rally and got back closer to the $1,800 level on strengthening U.S. dollar, Fed’s monetary policy tightening fears. This morning the yellow metal is bouncing from the new local low, as we can see on the daily chart (the chart includes today’s intraday data):

Precious Metals Price Action

Gold is 0.7% higher this morning, as it is trading along the $1,850 level. What about the other precious metals? Silver is 2.6% higher, platinum is 2.8% higher and palladium is 1.2% lower. So the main precious metals’ prices are higher this morning.

Fundamentals and Economic News Schedule

Today at 8:30 a.m. we will get the important Consumer Price Index release. It is expected at +0.2% m/m.

The markets will continue to react to the ongoing Russia-Ukraine war news.

Below you will find our Gold, Silver, and Mining Stocks economic news schedule for the next two trading days.

Wednesday, May 11

  • 4:00 a.m. Eurozone – ECB President Lagarde Speech
  • 8:30 a.m. U.S. – CPI m/m, Core CPI m/m
  • 1:01 p.m. U.S. – 10-y Bond Auction
  • 2:00 p.m. U.S. – Federal Budget Balance
  • All Day – OPEC Meetings

Thursday, May 12

  • 8:30 a.m. U.S. – PPI m/m, Core PPI m/m, Unemployment Claims
  • 1:01 p.m. U.S. – 30-y Bond Auction
  • 4:00 p.m. U.S. – FOMC Financial Stability Report

For a look at all of today’s economic events, check out our economic calendar.

Paul Rejczak
Stock Trading Strategist
Sunshine Profits: Analysis. Care. Profits.

* * * * *

Disclaimer

All essays, research and information found above represent analyses and opinions of Paul Rejczak and Sunshine Profits’ associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Paul Rejczak and his associates do not guarantee the accuracy or thoroughness of the data or information reported.

The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Rejczak is not a Registered Securities Advisor. By reading Paul Rejczak’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Paul Rejczak, Sunshine Profits’ employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

 

Daily Gold News: Tuesday, May 10 – Gold Trades Along the Recent Lows

Gold Price Recap

The gold futures contract lost 1.29% on Monday, May 9, as it extended a short-term consolidation below the $1,900 price level. Gold continues to fluctuate after declining from the resistance level of $2,000 in April on strengthening U.S. dollar, Fed’s monetary policy tightening fears. This morning the yellow metal is trading along its yesterday’s closing price, as we can see on the daily chart (the chart includes today’s intraday data):

Precious Metals Price Action

Gold is 0.2% higher this morning, as it is trading slightly above the $1,850 level. What about the other precious metals? Silver is unchanged, platinum is 1.7% higher and palladium is 0.8% lower. So the main precious metals’ prices are mixed this morning.

Fundamentals and Economic News Schedule

Yesterday’s Wholesale Inventories number release has been as expected at +2.3%. Today we will get speeches from the Fed members, and the markets will be waiting for the important Consumer Price Index release tomorrow.

The markets will continue to react to the ongoing Russia-Ukraine war news.

Below you will find our Gold, Silver, and Mining Stocks economic news schedule for the next two trading days.

Tuesday, May 10

  • 5:00 a.m. Eurozone – German ZEW Economic Sentiment
  • 6:00 a.m. U.S. – NFIB Small Business Index
  • 7:40 a.m. U.S. – FOMC Member Williams Speech
  • 1:00 p.m. U.S. – FOMC Member Waller Speech
  • 3:00 p.m. U.S. – FOMC Member Mester Speech

Wednesday, May 11

  • 4:00 a.m. Eurozone – ECB President Lagarde Speech
  • 8:30 a.m. U.S. – CPI m/m, Core CPI m/m
  • 1:01 p.m. U.S. – 10-y Bond Auction
  • 2:00 p.m. U.S. – Federal Budget Balance
  • All Day – OPEC Meetings

For a look at all of today’s economic events, check out our economic calendar.

Paul Rejczak
Stock Trading Strategist
Sunshine Profits: Analysis. Care. Profits.

* * * * *

Disclaimer

All essays, research and information found above represent analyses and opinions of Paul Rejczak and Sunshine Profits’ associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Paul Rejczak and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Rejczak is not a Registered Securities Advisor. By reading Paul Rejczak’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Paul Rejczak, Sunshine Profits’ employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

COT: China Growth Fears and Strong Dollar Drive Exodus From Metals

A week that saw a continued deterioration in the global growth outlook driven by extended China lockdowns, a stronger dollar and increasingly aggressive rate hike signals from members of the US Federal Reserve. The week highlighted how traders positioned themselves ahead of last Wednesday’s FOMC meeting. During the week US ten-year bond yields jumped 25 basis points while the dollar reached fresh cycle highs against most currencies. Commodities were mixed with gains in energy and softs being offset by losses across grains, livestock and metals.

Saxo Bank publishes weekly Commitment of Traders reports (COT) covering leveraged fund positions in commodities, bonds and stock index futures. For IMM currency futures and the VIX, we use the broader measure called non-commercial.

Commodities

The Bloomberg Commodity Spot index traded close to unchanged in the week to May 3 with a six percent gain in energy led by natural gas and diesel as well higher prices for cocoa and cotton in the softs sector, offsetting weakness in precious (-2.3%) and industrial metals (-5.2%), as well as grains (-2.8%).

Speculators and money managers responding to these price changes and the continued loss of momentum by cutting bullish bets across 24 major commodity futures by 7% to 1.85 million lots, a four month low.

Despite racing to a record high in recent weeks, the sector has increasingly become nervours about the global growth and demand look. In the short term due to Chinese lockdowns and longer term due to high inflation and tightening monetary conditions hurting demand. The drop in the total net long to a four months low also driven by elevated volatility forcing leveraged funds, targeting a certain level of volatiltiy to cut their exposure.

From a recent pre-war and pre-China lockdown peak on February 22 at 2.23 million lots, the energy sector exposure has been cut by 23%, metals are down 67% while the agriculture sector is up 2% led by softs.

Energy

Crude oil and refined product futures witnessed a small build in net longs held by funds while a 14% surge in natural gas helped trigger profit taking resulting in a 14% reduction in the net long held in four Henry Hub deliverable futures and swap contracts. Small buying of crude oil did not hide the fact momentum has slowed and traders have become more risk adverse given the number of multiple forces currently impacting the price of oil in both directions.

Latest: Crude oil (OILUKJUL22 & OILUSJUN22) trades steady near a one-month high with the general risk aversity from a stronger dollar, the economic damage from China lockdowns, inflation and monetary tightening being offset by continued supply concerns from Russia and other OPEC+ producers struggling to meet their production targets. G-7 leaders have joined the EU in making a commitment to phase out their dependency on Russian energy, including oil.

While the risk in our opinion remains skewed to the upside, the latest developments are likely to keep crude oil rangebound with focus instead on refined products where multi-year highs are already hurting demand. Monthly oil market reports from EIA Tuesday, followed by OPEC and IEA on Thursday.

Metals

Gold was sold for a third consecutive week with the net-long falling to a three-month low with rising yields and the stronger dollar driving a loss of momentum. The 17% reduction to 82.9k lots was driven by a combination of long liquidation and fresh short selling lifting the gross short to a seven-month high.

Copper has recently suffered from extended China lockdowns hurting the outlook for demand from the worlds top consumer, as well as short selling from macro-based funds using copper as a short play on China. Four weeks of net selling culminated last week with the position flipping to a net short of 8.8k lots for the first time in two years.

Latest: Gold remains at the mercy of a continued rise in US Treasury yields and the stronger dollar with inflation data this week from the U.S. and elsewhere potentially driving additional volatility across market. China and India, two major sources of demand for gold, both seeing their currencies weakening against the dollar, thereby potentially negatively impacting the short-term demand outlook.

Overall, however, compared with stocks and bonds, gold’s relative strength continues. As of last Friday, an investor based in dollars holding gold was +16% ahead relative to the S&P 500 and more than 26% versus TLT:arcx an ETF that tracks the performance of long-dated US government bonds.

In Europe, an investor based in euros has seen an XAUEUR position outperform the pan-European Stoxx50 index by more than 25% and 20% versus an ETF tracking European government bonds. Support at $1850 and $1830.

Agriculture

The grains sector saw selling across all of the six futures contracts led by a 50k lots reduction across the three soybean contracts. The overall 66k reduction was generally driven by a combination of longs being reduced and fresh short positions being added.

Overall the total net long across the sector and the Bloomberg Grains Spot index remains close to a multiyear high, a reflection of current adverse weather uncertainty across the world raising concerns about production levels, together with the risk of the Ukraine war preventing production and exports of key food commodities from wheat to sunflower oil.

Forex

Broad dollar strength and with that broad demand against its major peers accelerated ahead of last week’s FOMC meeting. As the Dollar index climbed to levels last seen in 2003, all of the nine IMM futures tracked in this saw net selling with the aggregate dollar long jumping by $6.3 billion or 41% to $21.8 billion. Selling was most noticeable in EUR were 28.6k lots of selling flipped the net back to a 6.4k lots net short.

This was followed by CAD (-11.9k) and JPY where 5.3k lots of selling took the net short to within 90% of the recent peak at -111.8k lots. Sterling meanwhile was sold for a ninth week, driving an increase in the net short to a 2-1/2-year high -73.8k lots.

What Is the Commitments of Traders report?

The COT reports are issued by the U.S. Commodity Futures Trading Commission (CFTC) and the ICE Exchange Europe for Brent crude oil and gas oil. They are released every Friday after the U.S. close with data from the week ending the previous Tuesday. They break down the open interest in futures markets into different groups of users depending on the asset class.

Commodities: Producer/Merchant/Processor/User, Swap dealers, Managed Money and other

Financials: Dealer/Intermediary; Asset Manager/Institutional; Leveraged Funds and other

Forex: A broad breakdown between commercial and non-commercial (speculators)

The reasons why we focus primarily on the behavior of the highlighted groups are:

  • They are likely to have tight stops and no underlying exposure that is being hedged
  • This makes them most reactive to changes in fundamental or technical price developments
  • It provides views about major trends but also helps to decipher when a reversal is looming

Ole Hansen, Head of Commodity Strategy at Saxo Bank.

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This article is provided by Saxo Capital Markets (Australia) Pty. Ltd, part of Saxo Bank Group through RSS feeds on FX Empire

What Does The Most Aggressive Tightening Cycle In Decades Mean For Commodity Prices?

Commodity Markets Fundamental Analysis

Central bankers and governments acknowledge that inflationary pressures could persist for years, driven in part by the on-going Russia-Ukraine war, lockdowns in China and soaring energy prices.

In the U.S, inflation is rising at its fastest pace in 41-years. In China and Japan, inflation is shattering records. While in many other economies, including the UK, Canada and Europe inflation is at its highest level in over 30-years and still accelerating.

If inflation continues to surge at the current pace across the world, then we’re only months away from a return to double-digit inflation on the same scale last seen in the 1970s.

To regain credibility, central banks across the world have come under pressure to move more aggressively on rate hikes, which ultimately means, Stagflation is now a major risk to the economy in the second half of the year, or worst still a recession.

Last week, the Federal Reserve executed their biggest interest rate hike in 22 years with a 50-basis point increase.

This is the first time since 2006 that the Fed has implemented rate increases at back-to-back meetings as rapidly surging inflationary pressures and the cost of living crisis continues to worsen.

Elsewhere, The Bank of England also followed in the Fed’s footsteps by raising interest rates to their highest level in 13 years.

Both the Fed and Bank of England have signalled they will follow up with more aggressive hikes of the same size at their upcoming meetings.

Historically, 11 of the last 14 major central bank tightening cycles since World War II have been followed by a recession within the next 12 months.

Will that be the same again this time around?

Only time will tell, however one thing we do know for certain is that global equity markets tend to crash once central banks begins their tightening cycle. This inversely presents huge bullish tailwinds for Commodities as they are viewed as one of the most reliable hedges against economic risk, inflation and recession.

Already within the first 4 month of 2022 – a total 27 Commodities ranging from the metals, energies to soft commodities have tallied up astronomical double to triple digit gains.

And this is just the beginning!

To quote Goldman Sachs, “they have never seen the Commodities markets this bullish before”.

Commodity Price Forecasts for the Week 9-13 May 2022

Where are prices heading next? Watch The Commodity Report now, for my latest price forecasts and predictions:

For a look at all of today’s economic events, check out our economic calendar.

Daily Gold News: Monday, May 9 – Gold Price Went Below $1,900 Again

Gold Price Recap

The gold futures contract gained 0.38% on Friday, May 6, as it continued to fluctuate within a short-term consolidation. Gold remained close to the $1,900 price level after declining from the resistance level of $2,000 in April on strengthening U.S. dollar, Fed’s monetary policy tightening fears. This morning the yellow metal is lower, as we can see on the daily chart (the chart includes today’s intraday data):

Precious Metals Price Action

Gold is 1.4% higher this morning, as it is trading well below the $1,900 level. What about the other precious metals? Silver is 2.9% lower, platinum is 2.9% lower and palladium is 1.9% lower. So the main precious metals’ prices are lower this morning.

Fundamentals

Friday’s Nonfarm Payrolls release has been better than expected at +428,000. Today we will get the Wholesale Inventories number release at 10:00 a.m.

The markets will continue to react to the ongoing Russia-Ukraine war news.

Where Would the Price of Gold Go Following Last Wednesday’s Fed Release?

We’ve compiled the data since January of 2017, a 62-month-long period of time that contains of forty three FOMC releases. The following chart shows average gold price path before and after the FOMC releases for the past 43 releases. The market was usually declining ahead of the FOMC day. Then it was going up for a week-long period. We can see that on average, gold price was 0.68% higher 10 days after the FOMC Statement announcement.

Economic News Schedule for Gold, Silver and Mining Stocks

Below you will find our Gold, Silver, and Mining Stocks economic news schedule for the next two trading days.

Monday, May 9

  • 10:00 a.m. U.S. – Final Wholesale Inventories m/m

Tuesday, May 10

  • 5:00 a.m. Eurozone – German ZEW Economic Sentiment
  • 6:00 a.m. U.S. – NFIB Small Business Index
  • 7:40 a.m. U.S. – FOMC Member Williams Speech
  • 1:00 p.m. U.S. – FOMC Member Waller Speech
  • 3:00 p.m. U.S. – FOMC Member Mester Speech

Paul Rejczak
Stock Trading Strategist
Sunshine Profits: Analysis. Care. Profits.

* * * * *

Disclaimer

All essays, research and information found above represent analyses and opinions of Paul Rejczak and Sunshine Profits’ associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Paul Rejczak and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Rejczak is not a Registered Securities Advisor. By reading Paul Rejczak’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Paul Rejczak, Sunshine Profits’ employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

 

Britain to increase tariffs on Russian platinum, palladium in new sanctions

LONDON (Reuters) – Britain announced on Sunday it will increase tariffs on platinum and palladium imports from Russia and Belarus in a new package of sanctions targeting 1.7 billion pounds ($2.10 billion) of trade, which it said aimed to further weaken Russian President Vladimir Putin’s war machine.

Import tariffs on a range of products will be raised by 35 percentage points, Britain said, while it will also ban exports of goods such as chemicals, plastics, rubber and machinery to Russia, worth a combined 250 million pounds ($310 million).

The UK government will legislate for the new sanctions in due course, it said.

Britain is acting in concert with its Western allies to try to cripple the Russian economy as punishment for Russia’s invasion of Ukraine, and it has already sanctioned more than 1,000 individuals and businesses.

Russia, a leading producer of platinum and palladium, has called the invasion it launched in February a “special military operation” aimed at demilitarizing and “denazifying” its neighbour.

British Finance Minister Rishi Sunak said more than 4 billion pounds of goods would be subject to import and export sanctions, doing “significant damage to Putin’s war effort”. They mark a third wave of sanctions against Russia since the invasion of Ukraine.

“Working closely with our allies we can and will thwart Putin’s ambitions,” Sunak said in a statement.

($1 = 0.8106 pounds)

(Reporting by Paul Sandle; Editing by Susan Fenton)

Global scramble for metals thrusts Africa into mining spotlight

By Helen Reid and Clara Denina

JOHANNESBURG (Reuters) – The need to secure new sources of metals for the energy transition amid sanctions on top producer Russia has increased the Africa risk appetite for major miners, who have few alternatives to the resource-rich continent.

Companies and investors are considering projects they may have previously overlooked, while governments are also looking to Africa, anxious to ensure their countries can procure enough metals to feed an accelerating net-zero push.

This year’s Investing in African Mining Indaba conference, which runs May 9-12 in Cape Town, will see the highest-ranking U.S. government official in years attending, organisers say, as well as representatives from the Japan Oil, Gas and Metals Corporation (JOGMEC), in a sign of rich countries’ rising concern about securing supply.

“The reality is that the resources the world wants are typically located in difficult places,” said Steven Fox, executive chairman of New York-based political risk consultancy Veracity Worldwide.

The U.S. administration wants to position itself as a strong supporter of battery metals projects in sub-Saharan Africa, he said.

“While Africa presents its challenges, those challenges are no more difficult than the corresponding set of challenges in Canada. It may be easier to actually bring a project to fruition in Africa, than in a place like Canada or the U.S.,” he added.

The United States has voiced support for new domestic mines, but projects have stalled. Rio Tinto’s Resolution copper project, for example, was halted over Native American claims on the land, and conservation issues.

Certainly, the risks of mining in sub-Saharan Africa remain high. The acute security challenge facing mines in the gold-rich Sahel region was highlighted last month when Russia’s Nordgold abandoned its Taparko gold mine in Burkina Faso over an increasing threat from militants.

And even in the continent’s most industrialised economy, South Africa, deteriorating rail infrastructure is forcing some coal producers to resort to trucking their product to ports.

Yet with Russia’s 7% of global nickel supply, 10% of the world’s platinum, and 25-30% of the world’s palladium off the table, Africa’s rich deposits of those metals start looking a lot more attractive.

“As a mining company, there aren’t many opportunities and if you are going to grow, you’re going to have to look at riskier countries,” said George Cheveley, portfolio manager at Ninety One.

“Clearly, after Russia-Ukraine people are more sensitive to geopolitical risk and you cannot predict which projects are going to work out and which are not,” he added.

Kabanga Nickel, a project in Tanzania, secured funding from global miner BHP in January, and CEO Chris Showalter said it is seeing increased demand from potential offtakers.

Western sanctions on Russia over its invasion of Ukraine are forcing metals supply chains to reconfigure along geopolitical lines, Showalter said.

“Not everyone’s going to be able to get clean battery metals from a friendly jurisdiction, so I think some difficult decisions will have to be made, and it is going to force people to make some new decisions about where they want to source.”

(Reporting by Helen Reid in Johannesburg and Clara Denina in London; Editing by Amran Abocar and Susan Fenton)

Unseen footage of Britain’s young Queen Elizabeth to be aired

LONDON (Reuters) – Previously unseen footage of Britain’s Queen Elizabeth as a young girl before acceding to the throne will feature in a new documentary airing at the end of this month, Buckingham Palace and broadcaster BBC said on Saturday.

The May 29 programme, drawing from home movies in the queen’s personal collection showing life as a princess, will precede celebrations for her seven decades as monarch.[L5N2WY572]

“This documentary is an extraordinary glimpse into a deeply personal side of the Royal Family that is rarely seen, and it’s wonderful to be able to share it with the nation as we mark her Platinum Jubilee,” said BBC history commissioning editor Simon Young.

Producers viewed more than 400 reels of film, including behind-the-scenes recordings of state events, and have dipped into more than 300 speeches she made, the BBC said.

Among the footage is a beaming Elizabeth showing off her ring from husband Prince Philip, who died last year aged 99, before their engagement was made public. The queen is 96.

(Reporting by Michael Holden; Editing by Andrew Cawthorne)

Queen to attend UK Jubilee celebrations, but snubs for Andrew and Harry

By Michael Holden

LONDON (Reuters) -Queen Elizabeth plans to attend major celebrations to mark her 70 years on the British throne next month, Buckingham Palace said on Friday, but two out-of-favour royals, Princes Andrew and Harry, will be excluded from one traditional event.

The 96-year-old, Britain’s longest-reigning monarch, marked seven decades as queen in February, and four days of “Platinum Jubilee” events to recognise that landmark are being held at the start of June.

Elizabeth has been struggling with mobility issues, meaning most of her recent public engagements have had to be cancelled, but Buckingham Palace said she did plan to be at a number of events.

“Her majesty is looking forward to the weekend and will be taking part in the celebrations, but her presence will not be confirmed until much nearer to the time or even on the day itself,” a palace spokesperson said.

The four days of events start on June 2 with the annual “Trooping the Colour” military parade in central London, followed by a thanksgiving service at St Paul’s Cathedral, a concert outside Buckingham Palace, and a pageant through the British capital on subsequent days.

One feature of all major royal occasions is the gathering of the royal family to wave at crowds from the palace balcony. But, the queen has decided neither her son Prince Andrew nor grandson Prince Harry will be there this time.

Andrew’s stock has plummeted after he settled a U.S. lawsuit in which he was accused of sexually abusing Virginia Giuffre when she was a teenager in February.

He had already stepped down from public duties because of his connections to the late convicted U.S. sex offender Jeffrey Epstein, and has been stripped of military titles and royal patronages and is no longer known as “His Royal Highness”.

Harry, younger son of heir Prince Charles, also gave up royal duties and lost his patronages after moving with his American wife Meghan to Los Angeles, from where they have delivered barbs and accusations of racism against the royal household.

“After careful consideration, the queen has decided this year’s traditional Trooping the Colour balcony appearance … will be limited to her majesty and those members of the royal family who are currently undertaking official public duties on behalf of the queen,” the palace spokesperson said.

There has been much speculation in the British press about whether Harry, who has been in a dispute with the government over security arrangements that caused him to miss his grandfather Prince Philip’s memorial service in March, would return for the Jubilee.

His spokesperson confirmed he would be there with Meghan and their two children, son Archie and daughter Lilibet, who was named after the queen. The family was “excited and honoured” to be attending, the spokesperson said in a statement.

A palace source had said Harry, Meghan and his children remained “much loved members of the family” and that those absent from the balcony moment “will be invited to events”.

(Reporting by Michael Holden; editing by John Stonestreet)

Daily Gold News: Friday, May 6 – Gold Price Extends Short-Term Consolidation

Gold Price Recap

The gold futures contract gained 0.37% on Thursday, May 5, as it continued to fluctuate following the recent declines. Gold broke above the $1,900 price level again, but it came back below that resistance level following stock markets’ sell-off and strengthening U.S. dollar. This morning the yellow metal is trading higher again, as we can see on the daily chart (the chart includes today’s intraday data):

Precious Metals Price Action

Gold is 0.4% higher this morning, as it is trading within a consolidation. What about the other precious metals? Silver is 0.1% lower, platinum is 2.6% lower and palladium is 1.7% lower. So the main precious metals’ prices are mixed this morning.

Fundamentals

Yesterday’s Unemployment Claims release has been worse than expected at 200,000 vs. the expected 180,000 number. The market will be waiting for today’s monthly jobs data announcement.

The markets will continue to react to the ongoing Russia-Ukraine war news.

Where Would the Price of Gold Go Following Wednesday’s Fed Release?

We’ve compiled the data since January of 2017, a 62-month-long period of time that contains of forty three FOMC releases. The following chart shows average gold price path before and after the FOMC releases for the past 43 releases. The market was usually declining ahead of the FOMC day. Then it was going up for a week-long period. We can see that on average, gold price was 0.68% higher 10 days after the FOMC Statement announcement.

Economic News Schedule

Below you will find our Gold, Silver, and Mining Stocks economic news schedule for today.

Friday, May 6

  • 8:30 a.m. U.S. – Non-Farm Employment Change, Unemployment Rate, Average Hourly Earnings m/m
  • 8:30 a.m. Canada – Employment Change, Unemployment Rate
  • 9:15 a.m. U.S. – FOMC Member Williams Speech
  • 3:00 p.m. U.S. – Consumer Credit m/m

For a look at all of today’s economic events, check out our economic calendar.

Paul Rejczak
Stock Trading Strategist
Sunshine Profits: Analysis. Care. Profits.

* * * * *

Disclaimer

All essays, research and information found above represent analyses and opinions of Paul Rejczak and Sunshine Profits’ associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Paul Rejczak and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Rejczak is not a Registered Securities Advisor. By reading Paul Rejczak’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Paul Rejczak, Sunshine Profits’ employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

What Do Rate Hikes Mean For Commodity Prices?

Monetary Policy Impact on Commodities

This is the first time since 2006 that the Fed has implemented rate increases at back-to-back meetings as rapidly surging inflationary pressures continue to become an overriding concern.

Traders now expect the central bank to continue raising rates aggressively with further 50 basis point hikes in the coming months. That has prompted concerns about “stagflation” – a period of high inflation accompanied by a slowdown in economic growth – and eventual recession.

Elsewhere this week, The Bank of England also followed in the Fed’s footsteps by raising interest rates to their highest level in 13 years.

The Bank expects UK inflation to rise above 10% as a result of the Russia-Ukraine war, lockdowns in China and soaring energy prices. It also warned that the economy will slide into recession this year.

As traders very well know – that both scenarios, whether that’s persistent inflation or a recession, ultimately present an extremely bullish backdrop for commodity prices.

So far this year, 27 Commodities ranging from the metals, energies to soft commodities have tallied up astronomical double to triple digit gains already – And this is just the beginning!

To quote Goldman Sachs “we’re still only at the first inning of a multi-year, potentially decade-long Commodities Supercycle”.

Commodity Price Forecast for 06.05.22

Where are prices heading next? Watch The Commodity Report now, for my latest price forecasts and predictions:

For a look at all of today’s economic events, check out our economic calendar.

Russia’s Potanin dodges politics and sanctions to flourish

(Reuters) – So far, at least, “Nickel King” Vladimir Potanin is Russia’s ultimate survivor.

Unlike many of Russia’s notable oligarchs, he has not been sanctioned by the United States or the European Union for his closeness to President Vladimir Putin.

And as Western companies quit Russia because of those sanctions, imposed as retaliation for Moscow’s invasion of Ukraine, he has snapped up assets to expand his own banking business.

On Monday, Potanin’s Interros holding company said it had bought United Card Services, the Russian unit of U.S.-listed Global Payments, for an undisclosed sum.

Last week, he bought 35% of TCS Group Holding, owner of Russia’s leading online bank, from its founder Oleg Tinkov, who had bitterly criticised the war after TCS’s share price plunged.

Three weeks before that, the head of mining giant Nornickel bought back Rosbank from Societe Generale, to whom he had sold it more than a decade earlier.

    That deal could further Potanin’s fintech ambitions. Rosbank is the banking partner of Atomyze, a blockchain platform in which Interros and Nornickel’s Global Palladium Fund are investors.

    Global Palladium Fund is one of the first commodity firms to make such a move into digital transactions, and Atomyze is the first Russian firm authorised to exchange digital assets by the government, which is trying to promote a new sector despite objections by the central bank.

Potanin is one of Russia’s richest people, although his net worth depends largely on the value of his 36% stake in Nornickel, the world’s largest producer of palladium and refined nickel – currently around $17 billion.

Like all successful Russian oligarchs, he has taken care to stay in Putin’s good books, for instance by meekly paying a $2 billion fine after Nornickel angered the president by causing Russia’s biggest Arctic oil spill two years ago.

Potanin’s standing will also have been burnished by his decision last December to move his offshore company Interros Capital from Cyprus back to the Russky Island economic zone in Russia’s far east.

But Potanin also depends on the minority investors, many of them Western, who own around 37% of Nornickel’s shares, and who might take fright if it, like many other Russian firms outside the energy sector, were placed under international sanctions or badly affected by them.

So far, Potanin and his companies have been spared by all countries except Canada and Australia, although the art lover has voluntarily quit his position as a trustee of New York’s Guggenheim Museum, where he had been a major benefactor.

Western governments have not said why Nornickel has been left out, but the explanation may lie in its importance to a global economy under acute stress from soaring energy costs, rising interest rates and post-pandemic supply chain problems.

Memories are still fresh of April 2018, when the price of aluminium jumped by a third after the United States imposed sanctions on Rusal, the world’s largest aluminium producer outside China, owned by Potanin’s sometime rival Deripaska.

Washington dropped the sanctions against Rusal nine months later, after Deripaska agreed to give up control of the firm.

Like Rusal, Nornickel also has an outsize influence on the market for industrial metals. In 2021, it was the world’s top producer of refined nickel, used to make stainless steel and important for electric vehicle batteries.

It extracted 7% of the nickel that was mined around the world, 10% of the platinum and a staggering 40% of the palladium, crucial for car exhausts.

“The West is so stupid and so cynical at the same time,” said one sanctioned oligarch, who spoke on condition of anonymity.

“You sanction me but then you leave off Potanin. Why? Because you want his metals.”

(Reporting by Reuters bureaux, Guy Faulconbridge; Writing by Kevin Liffey; editing by Frank Jack Daniel)

Daily Gold News: Wednesday, May 4 – Gold Price Fluctuates Ahead of Today’s FOMC Release

Gold Price Recap

The gold futures contract gained 0.38% on Tuesday, May 3, as it retraced some of its Monday’s decline. On Monday gold sold off by 2.5% on strengthening U.S. dollar, stock markets’ declines. The market remains below the $1,900 level. This morning gold is trading along its yesterday’s closing price, as we can see on the daily chart (the chart includes today’s intraday data):

Precious Metals Price Action

Gold is 0.1% lower this morning, as it is trading above the $1,850 price level. What about the other precious metals? Silver is unchanged, platinum is 1.6% higher and palladium is 0.5% higher. So the main precious metals’ prices are virtually flat this morning.

Gold Fundamentals and Economic News Schedule

Yesterday’s JOLTS Job Openings has been higher than expected at 11.55M. Today we will get the important FOMC Monetary Policy release at 2:00 p.m. We will also get the ADP Non-Farm Employment Change release at 8:15 a.m.

The markets will continue to react to the ongoing Russia-Ukraine war news.

Where would the price of gold go following today’s Fed release? We’ve compiled the data since January of 2017, a 62-month-long period of time that contains of forty three FOMC releases. The first chart shows price paths 5 days before and 10 days after the FOMC release. The latest FOMC Statement release came out on March 16. Gold price was 1.6% higher 10 days after the release.

The following chart shows average gold price path before and after the FOMC releases for the past 43 releases. The market was usually declining ahead of the FOMC day. Then it was going up for a week-long period. We can see that on average, gold price was 0.68% higher 10 days after the FOMC Statement announcement.

Below you will find our Gold, Silver, and Mining Stocks economic news schedule for the next two trading days.

Wednesday, May 4

  • 8:15 a.m. U.S. – ADP Non-Farm Employment Change
  • 8:30 a.m. U.S. – Trade Balance
  • 9:45 a.m. U.S. – Final Services PMI
  • 10:00 a.m. U.S. – ISM Services PMI
  • 2:00 p.m. U.S. – FOMC Statement, Federal Funds Rate
  • 2:30 p.m. U.S. – FOMC Press Conference
  • All Day, Japan – Bank Holiday

Thursday, May 5

  • 7:00 a.m. U.K. – BOE Monetary Policy Report, MPC Official Bank Rate Votes, Monetary Policy Summary, Official Bank Rate
  • 7:30 a.m. U.S. – Challenger Job Cuts y/y
  • 8:30 a.m. U.S. – Unemployment Claims, Preliminary Nonfarm Productivity q/q, Preliminary Unit Labor Costs q/q
  • 9:30 p.m. Australia – RBA Monetary Policy Statement
  • All Day – OPEC-JMMC Meetings

For a look at all of today’s economic events, check out our economic calendar.

Paul Rejczak
Stock Trading Strategist
Sunshine Profits: Analysis. Care. Profits.

* * * * *

Disclaimer

All essays, research and information found above represent analyses and opinions of Paul Rejczak and Sunshine Profits’ associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Paul Rejczak and his associates do not guarantee the accuracy or thoroughness of the data or information reported. The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Rejczak is not a Registered Securities Advisor. By reading Paul Rejczak’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Paul Rejczak, Sunshine Profits’ employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

 

Traders Await Fed Rate Decision For Clues On Gold’s Next Big Move – What’s Next?

Central Bank Rate Hikes

Almost seven weeks after the Federal Reserve raised interest rates for the first time in the pandemic era, the central bank is set to hold its third pivotal meeting of the year as monetary policy makers struggle to contain rapidly surging inflation.

The Federal Reserve is expected to raise rates by 50 basis points in what would be the biggest interest hike since 1994. The FOMC is also likely to unveil plans for further ‘aggressive’ rate hikes in the upcoming months – with economists now worried about the prospect of a recession at a time when consumer prices are already rising at their fastest pace in four decades.

The outcome of the Federal Reserve’s monetary policy decision, will inevitably kick-off a snowball effect that in turn lays out path for other central banks across the world to follow.

Next up this week will be The Bank of England, who traders anticipate will lift rates to the highest in 13 years. Elsewhere, the European Central Bank might not be far behind with an announcement of their first rate hike in over a decade.

Gold Price Forecast Video for 04.05.22

Where are prices heading next? Watch The Commodity Report now, for my latest price forecasts and predictions:

For a look at all of today’s economic events, check out our economic calendar.

Gold prices gain following a pull-back in yields, dollar

By Ashitha Shivaprasad

(Reuters) – Gold firmed on Tuesday, tracking a slight retreat in U.S. Treasury yields and dollar, while investors anticipated an aggressive interest rate hike from the Federal Reserve when it concludes a two-day policy meeting.

Spot gold was up 0.4% at $1,870.56 per ounce by 1751 GMT. Prices had touched $1,849.90 earlier in the session, its lowest since Feb. 16.

U.S. gold futures settled up 0.4% at $1,870.60 per ounce.

“Gold in recent weeks has dropped significantly as the yield curve has moved up. Today a slight retreat in yields is supporting gold prices… Gold is going to be fairly range-bound,” said Bart Melek, head of commodity strategies at TD Securities.

“Gold has pretty much priced in a fairly aggressive set of policy moves for the Fed meeting.”

U.S. benchmark 10-year Treasury yields backed off the 3% level on Tuesday. Meanwhile, the dollar index was down 0.3%, making bullion less expensive to other currency holders.[US/] [USD/]

Market participants expect the Fed to raise rates by 50 basis points at the end of a two-day meeting on Wednesday in order to rein in soaring inflation, while comments by Chairman Jerome Powell will be scanned for further signals on rate hikes.

While gold is considered an inflation hedge, higher interest rates lift the opportunity cost of holding zero-yield bullion.

If the FOMC meeting is more hawkish, gold could dip to levels indicated by real yields. However, a dovish meeting or escalation in geopolitical tensions or inflation fears could push gold back towards $1,900/oz, Standard Chartered analysts said in a note.

“The sharply higher dollar against both the Indian rupee and Chinese renminbi, the world’s biggest buyers of physical gold may trigger a challenging period for gold, until buyers adapt to higher levels,” Saxo Bank analyst Ole Hansen said in a note.

Spot silver fell 0.1% to $22.60 per ounce.

Platinum firmed 3% to $962.93, and palladium rose 2.1% to $2,262.84.

(Reporting by Ashitha Shivaprasad in Bengaluru; Editing by Krishna Chandra Eluri, Bernadette Baum and Shailesh Kuber)

Daily Gold News: Tuesday, May 3 – Gold Price Extended its Downtrend

Gold Price Recap

The gold futures contract lost 2.52% on Monday, May 2, as it fell closer to the $1,850 price level. The yellow metal retraced its Friday’s gain of 1.1% and it was the lowest since mid-February. The market is still reacting to strong U.S. dollar and Fed’s monetary policy tightening plans. This morning gold is trading along the yesterday’s closing price, as we can see on the daily chart (the chart includes today’s intraday data):

Precious Metals Price Action

Gold is 0.2% lower this morning, as it is trading slightly above the $1,850 price level. What about the other precious metals? Silver is 0.1% higher, platinum is 1.1% higher and palladium is 1.8% higher. So the main precious metals’ prices are mixed this morning.

Gold Fundamental Analysis and Economic News Schedule

Yesterday’s ISM Manufacturing PMI release has been worse than expected at 55.4. Today we will get the JOLTS Job Openings at 10:00 a.m. Tomorrow, the important FOMC Monetary Policy will be released and on Friday we will get the monthly jobs data.

The markets will continue to react to the ongoing Russia-Ukraine war news.

Below you will find our Gold, Silver, and Mining Stocks economic news schedule for the next two trading days.

Tuesday, May 3

  • 12:30 a.m. Australia – Cash Rate, RBA Rate Statement
  • 9:00 a.m. – ECB President Lagarde Speech
  • 10:00 a.m. U.S. – JOLTS Job Openings, Factory Orders m/m
  • All Day, Eurozone – ECOFIN Meetings, Eurogroup Meetings
  • All Day, China – Bank Holiday
  • All Day, Japan – Bank Holiday

Wednesday, May 4

  • 8:15 a.m. U.S. – ADP Non-Farm Employment Change
  • 8:30 a.m. U.S. – Trade Balance
  • 9:45 a.m. U.S. – Final Services PMI
  • 10:00 a.m. U.S. – ISM Services PMI
  • 2:00 p.m. U.S. – FOMC Statement, Federal Funds Rate
  • 2:30 p.m. U.S. – FOMC Press Conference
  • All Day, Japan – Bank Holiday

Paul Rejczak
Stock Trading Strategist
Sunshine Profits: Analysis. Care. Profits.

* * * * *

Disclaimer

All essays, research and information found above represent analyses and opinions of Paul Rejczak and Sunshine Profits’ associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Paul Rejczak and his associates do not guarantee the accuracy or thoroughness of the data or information reported.

The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Rejczak is not a Registered Securities Advisor. By reading Paul Rejczak’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Paul Rejczak, Sunshine Profits’ employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

Commodity Markets Analysis – Can The Fed Fight Inflation Without Causing A Recession?

Commodity Markets Fundamental Analysis

It is becoming more evident, day by day, that Central banks across the world are fighting a losing battle against rapidly surging inflation and no matter what actions they take now, it will be nowhere enough to tame ever-rising inflationary pressures.

Looking back throughout the whole of 2021, Fed Chair Jerome Powell played down the biggest year-on-year rise in inflation seen in more than four decades – characterizing the record spike as “transitory”, which inevitability will always be remembered as the worst inflation call in the history of the Federal Reserve.

Fast forward to today – inflation is running at a 41-year high and still rapidly accelerating.

To regain its credibility, the Fed must now be seen to move more aggressively on rate hikes, which ultimately means, Stagflation is now a major risk to the economy in the second half of the year, or worst still a recession.

As traders very well know – Monetary policy is a blunt instrument, not capable of surgical precision.

There is generally a very narrow path in successfully engineering a slowdown without causing unintended economic damage. Right now, that path looks extraordinarily narrow given just how far the current rate of inflation is away from the Fed’s preferred inflation target of 2%.

Historically, 11 of the last 14 Fed tightening cycles since World War II have been followed by a recession within the next 12 months.

Will the Fed get it right this time?

Only time will tell, however one thing we do know for certain is that Equity markets tends to lose altitude once the Fed begins its tightening cycle. This inversely presents huge bullish tailwinds for the entire commodities sector ranging from the metals, energies to soft commodities – as they are viewed as one of the most reliable hedges against economic risk, inflation and recession.

So far this year, 27 Commodities ranging from the metals, energies to soft commodities have tallied up astronomical double to triple digit gains already – And this is just the beginning!

To quote Goldman Sachs, “they have never seen the Commodities markets this bullish before”.

Commodity Price Forecast Video for the Week 2 – 6 May 2022

Where are prices heading next? Watch The Commodity Report now, for my latest price forecasts and predictions:

For a look at all of today’s economic events, check out our economic calendar.

Daily Gold News: Monday, May 2 – Gold Breaks Below $1,900 Again

Gold Price Action

The gold futures contract gained 1.08% on Friday, Apr. 29, as it retraced some of the recent declines. The market continued to fluctuate along the $1,900 price level after going down on strenghtening U.S. dollar, Fed’s monetary policy tightening plans, among other factors. This morning gold is below the $1,900 level again, as we can see on the daily chart (the chart includes today’s intraday data):

Precious Metals Price Action

Gold is 0.8% lower this morning, as it is trading closer to its last week’s low. What about the other precious metals? Silver is 0.2% lower, platinum is unchanged and palladium is 2.3% lower. So the main precious metals’ prices are lower this morning.

Gold Fundamental Analysis and Economic News Schedule

Friday’s Core PCE Price Index release has been as expected at +0.3%. Today we will get the ISM Manufacturing PMI release at 10:00 a.m. On Wednesday we will get the important FOMC Monetary Policy release and on Friday there will be a monthly jobs data announcement.

The markets will continue to react to the ongoing Russia-Ukraine war news.

Below you will find our Gold, Silver, and Mining Stocks economic news schedule for the next two trading days.

Monday, May 2

  • 9:45 a.m. U.S. – Final Manufacturing PMI
  • 10:00 a.m. U.S. – ISM Manufacturing PMI, ISM Manufacturing Prices, Construction Spending m/m
  • All Day, China – Bank Holiday
  • All Day, Japan – Bank Holiday
  • All Day, U.K. – Bank Holiday

Tuesday, May 3

  • 12:30 a.m. Australia – Cash Rate, RBA Rate Statement
  • 10:00 a.m. U.S. – JOLTS Job Openings, Factory Orders m/m
  • All Day, Eurozone – ECOFIN Meetings, Eurogroup Meetings
  • All Day, China – Bank Holiday
  • All Day, Japan – Bank Holiday

Paul Rejczak
Stock Trading Strategist
Sunshine Profits: Analysis. Care. Profits.

* * * * *

Disclaimer

All essays, research and information found above represent analyses and opinions of Paul Rejczak and Sunshine Profits’ associates only. As such, it may prove wrong and be a subject to change without notice. Opinions and analyses were based on data available to authors of respective essays at the time of writing. Although the information provided above is based on careful research and sources that are believed to be accurate, Paul Rejczak and his associates do not guarantee the accuracy or thoroughness of the data or information reported.

The opinions published above are neither an offer nor a recommendation to purchase or sell any securities. Mr. Rejczak is not a Registered Securities Advisor. By reading Paul Rejczak’s reports you fully agree that he will not be held responsible or liable for any decisions you make regarding any information provided in these reports. Investing, trading and speculation in any financial markets may involve high risk of loss. Paul Rejczak, Sunshine Profits’ employees and affiliates as well as members of their families may have a short or long position in any securities, including those mentioned in any of the reports or essays, and may make additional purchases and/or sales of those securities without notice.

COT: Metals Led Exodus of Spec Longs on FOMC and Growth Fears

A week that saw a continued deterioration in the global growth outlook driven by extended China lockdowns and increasingly aggressive rate hike signals from members of the US FOMC. The S&P 500 lost 6.4% while VIX jumped 12% to 33.5%. The broad Bloomberg dollar index rose 1.3% while ten-year bond yields slumped by 22 basis points to 2.72%.

Saxo Bank publishes weekly Commitment of Traders reports (COT) covering leveraged fund positions in commodities, bonds and stock index futures. For IMM currency futures and the VIX, we use the broader measure called non-commercial.

Commodities

The Bloomberg Commodity Spot index dropped 2.3% after hitting a post-Easter record high with all sectors registering losses led by industrial metals (-5.2%) and precious metals (-4%). In response to these developments, hedge funds cut bets on rising commodity prices by the most since last November. Seventeen out of 24 contracts saw net selling with overall net long being reduced by 8% to 2 million lots, representing a $14.3 billion drop in the nominal value to $149.3 billion.

Biggest reductions hitting the metal sector led by gold and copper, followed by the softs sector. The energy sector saw no appetite for adding exposure, despite strong gains among the fuel contracts.

Latest updates on crude oil, gold and copper can be found in our daily Market Quick Take here

Energy

Crude oil was mixed with surging fuel prices supporting a relative outperformance of the WTI contract, but overall a 12k lots increase in WTI was more than offset by a 14k lots reduction in Brent, on global demand concerns, thereby leaving the net down by 2k to 411k lots, and near a 17-month low.

Fuel products surged higher amid tightness caused by Russian sanctions with gasoil in Europe and diesel in New York (ULSD) both surging higher by 30% and 27% respectively. These changes, however, did not attract any appetite for adding risk with both contracts seeing only small changes.

Metals

The combination of growth concerns, especially in China, and very aggressive rate hike statements from US FOMC members, combined with a stronger dollar, helped drive a dismal week for both industrial and precious metals.

Speculators responded to the 2.8% drop in gold by cutting bullish bets by 20% to 99.4k lots with the bulk of the change being driven by long liquidation, not fresh short selling. A similar picture in silver which in response to a 7.4% loss saw its net long being cut by 36% to 26.5k lots.

Platinum saw 13.3k lots of selling flip the net positions back to a net short for the first time since September. HG Copper fared even worse with speculators wiping the slate clean with the net returning close to neutral for the first time since May 2020 when the price was trading close to half the current level.

Agriculture

The grains sector saw the net long being reduced from a ten-year high by 36k lots to 783k lots. Selling was led by corn and soybeans while wheat only witnessed a small reduction in an already relative small bullish bet. The exception was soybean oil which jumped 5.4% in response to a growing global supply crisis impacting edible oils such as sunflower and palm oil.

The softs sector saw the biggest week of net selling since November with the stronger dollar and a general deterioration in risk appetite triggering reductions across all four commodities led by sugar and cocoa.

Forex

Another week of broad dollar strength with the Dollar Index rising 1.3% saw speculators turn net buyers of dollars for the first time in four weeks. The net long versus ten IMM currency futures and the Dollar Index rose 8% to $15.7 billion.

Currencies seeing the biggest amount of net selling was led by the euro (-9.1k lots) and sterling (-10.7k lots) with the latter seeing the net short reach a 2-1/2-year high at 69.6k lots. Yen short covering after hitting a 20-year low supported a temporary bounce, and with that a 11.7k lots reduction in the net short to 95.5k lots, still by far the most shorted currency against the dollar.

What is the Commitments of Traders report?

The COT reports are issued by the U.S. Commodity Futures Trading Commission (CFTC) and the ICE Exchange Europe for Brent crude oil and gas oil. They are released every Friday after the U.S. close with data from the week ending the previous Tuesday. They break down the open interest in futures markets into different groups of users depending on the asset class.

Commodities: Producer/Merchant/Processor/User, Swap dealers, Managed Money and other

Financials: Dealer/Intermediary; Asset Manager/Institutional; Leveraged Funds and other

Forex: A broad breakdown between commercial and non-commercial (speculators)

The reasons why we focus primarily on the behavior of the highlighted groups are:

  • They are likely to have tight stops and no underlying exposure that is being hedged
  • This makes them most reactive to changes in fundamental or technical price developments
  • It provides views about major trends but also helps to decipher when a reversal is looming

Ole Hansen, Head of Commodity Strategy at Saxo Bank.

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This article is provided by Saxo Capital Markets (Australia) Pty. Ltd, part of Saxo Bank Group through RSS feeds on FX Empire