Top Trading Commodities: Gold’s Rebound
Gold probably rose more than 1% on Monday as an increase in expectations for U.S. interest rate cuts eased, with investors awaiting a key inflation report in the middle of this week, reports Forbes.
Spot gold was up about 1% to $2,355.60 an ounce by 10:05 a.m. ET (1405 GMT), after first touching its lowest since May 9 on Friday at $2,325.19.
Most US markets were closed for the Memorial Day federal holiday.
Bullion hit a record intraday high of $2,449.89 last week but has since given back more than $100.
Top Trading Commodities: Market Reactions
Gold has been knocked lower by more hawkish than expected comments from Fed officials and better-than-expected US data, with market watchers once again bringing forward the expected date of the first Fed rate cut, said UBS analyst Giovanni Staunovo.
Federal Reserve officials said it was likely to take longer than they had assumed earlier to drive inflation back to 2%, minutes of their latest policy meeting showed last week.
Top Trading Commodities: Interest Rate Speculations
In an interview on Friday, the Federal Reserve governor Christopher Waller said that a benchmark underlying interest rate that governs how monetary policy works might rise in the next few years, after a long period of declines, but that we don’t know if that will happen.
Top Trading Stocks: Inflation and Interest Rate Speculations & Trading Opportunities!
Gold is traditionally regarded as a hedge against inflation, but higher rates increase the cost of holding this non-yielding asset.
Top Trading Commodities: Awaiting Economic Data
The Fed-watchers will next be eyeing the April reading on the U.S. central bank’s preferred inflation gauge, the personal consumption expenditures (PCE) price index, which is due on Friday – a measure investors were predicting an 18% chance of rate cuts at November’s meeting, but now price in only a roughly 62% probability of a rate cut in November, down from about a 63% chance on Friday.
Top Trading Commodities: Silver’s Performance
Spot silver gained 3.6% to $31.42. It touched an 11-year peak last week. ‘Silver has done much better than gold this year, and it will continue to do so,’ Staunovo said.
Platinum added 2.7% to $1,052.75, while palladium rose 2.9% to $991.11. Both the metals were up 3% earlier in the day.
Top Trading Commodities: Methane Emissions Legislation
European Union countries adopted a regulation on Monday requiring Europe’s oil and gas imports starting in 2030 to limit methane emissions, which would in effect pressure international suppliers to curb leaks of the supercharged greenhouse gas.
The major ingredient in natural gas that countries burn in power plants and to heat homes is known as methane.
Top Trending Commodities: Gold Prices Soar Near Record Peaks
Methane is the second-largest cause of global warming after carbon dioxide.
Top Trading Commodities: Oil Market Outlook
Oil prices picked up in subdued trading on Tuesday after a gloomy week as the prospect of rising U.S. interest rates to rein in sticky inflation, thanks to a robust jobs report, offset Glencore’s better profitability a day earlier.
The Brent crude July contract rose 76 cents to $82.88 a barrel by 1411 GMT while the more active August contract was up 80 cents at $82.64.
U.S. West Texas Intermediate (WTI) crude futures were up 78 cents at $78.50 a barrel.
Top Trading Commodities: BP and EOG Collaboration
One of the world’s largest integrated oil major, BP, and a giant US shale producer, EOG Resources, are in talks to proceed jointly in the development of a natural gas field in the coastal waters off the islands of Trinidad and Tobago.
With a total of slightly less than 1 tcf of natural gas in place, the field – once the field in question is tied back into another BP discovery in the area and the producing facility comes into service – could potentially produce closer to 1.5 tcf of natural gas.
Top Trading Commodities: Texas Power Consumption
The hottest day of the year so far arrived in Texas on Sunday with daily power consumption reaching a record high for the month of May, the fourth such record this month, as residents and businesses crank airconditioning units to escape a heat wave.
Power demand from the Electric Reliability Council of Texas (ERCOT), the state grid operator for most of the state’s power grid in which 27 million customers live, reached a preliminary 73,756 megawatts (MW) by late Sunday, the operator said.
Top Trading Commodities: Future Outlook
‘We expect gold prices to remain volatile, and price corrections to be shallow, while targeting gold prices to test new record highs later this year,’ UBS’s Staunovo said.
So traders and investors will keep a close eye on the top trading commodities and how market trends, economic data and policy changes play out.
Top Trading Commodities: Gold’s Market Dynamics
Gold prices sparked higher by 1% on Monday. This came on the back of a two-week low, as optimism finally started to correct the short-covering that moved the yellow metal the previous day.
The rally stems from investors paring back bets for US interest rate cuts after a few terms on the FED forecasts were priced out by money markets this week.
Spot gold recovered from a dip that took it as low as $2,325.19 a troy ounce.
As of now, it trades at $2,355.60.
Such volatility is as common for the top trading commodities as poor headlines are for Hillary Clinton this year.
A week after touching $2,449.89, a record high, gold shed more than $100.
Top Trading Commodities: Impact of Federal Reserve Policies
The Federal Reserve plays a major role in the supply and demand conditions of trading commodities at the top of the list
The rise in yields has been linked to a perceived hawkish approach by Fed officials, amid better-than-expected economic data that has convinced investors that inflation might take longer to return to the central bank’s 2% target.
‘Gold felt cut off after hawkish perceived comments by the Fed and better-than-expected US economic data,’ UBS analyst Giovanni Staunovo told Bloomberg on 9 June.
Top Trading Commodities: Interest Rate Concerns
And Fed Governor Christopher Waller warned that index of prevailing interest rates in the economy might take flight at any time, after years of closing down.
There’s one reason why interest rates matter: they add to the opportunity cost of holding a non-yielding asset such as gold.
When rates rise, this spurs investors to sell gold, if not for good, then at least for long enough to make those rates attractive; otherwise, why not spend a gold-fuelled fortune?
Therefore, central banks cease purchasing gold, or they become net sellers, creating a downward pull on spot prices. Gold shout: Bitcoin is no friend of the non-discriminating central banks or their inflation-fighting offspring, the climate-focused central bankers.
The Fed’s announcement of interest-rate hikes added downward pressure to Bitcoin spot prices.
Top Trading Commodities: Upcoming Economic Indicators
Investors, meanwhile, are awaiting the April reading on the US central bank’s favourite inflation barometer, the personal consumption expenditures (PCE) price index, with that number likely moving the needle on market bets that the Fed will start cutting rates in November, now seen at a 62% chance.
Top Trading Commodities: Silver’s Strong Performance
The other trading commodity that had a good day was silver, which rose 3.6% to $31.42 and reached an 11-year high earlier this week, according to the latest reports.
‘Silver did very well this year compared to gold, and so it will continue to do so,’ said Staunovo.
In addition, PGM also did very well, with platinum rising 2.7% and palladium rising by 2.9%.
Top Trading Commodities: EU Methane Emissions Legislation
In October, the EU approved a new law mandating that oil and gas imports must be accompanied by methane emissions limits, effective in 2030.
Methane, a potent contributor to planetary heating, is the principal constituent of natural gas.
The EU’s policy, approved this week by the European Parliament, will require almost every major natural gas-exporting country in the world to reduce its global emissions of methane.
They include the United States, Algeria and Russia.
Top Trading Commodities: Oil Market Movements
Muted trade followed public holidays in Britain and the US, with the Brent crude July contract adding 76 cents to $82.88 a barrel and the August contract rising 80 cents, while US West Texas Intermediate (WTI) crude futures rose on what some traders were attributing to continued recalibration of investor expectations on path of Federal Reserve policy.
Top Trading Commodities: BP and EOG Joint Venture
And just this month, BP and the US shale producer EOG Resources have begun negotiating over a joint venture to develop a natural gas field offshore Trinidad and Tobago: the natural gas discovery, nearly 1 trillion cubic feet, will be tied into EOG’s BP discovery and help bring development potential on the area to 1.5 trillion cubic feet.
Strategic commodities such as natural gas are the lifeblood of top trading nations.
Top Trading Commodities: Texas Power Consumption Record
And in May, Texas, trying desperately to stay cool during an intense heatwave, smashed records for power demand as citizens cranked up their air-conditioning units.
The Electric Reliability Council of Texas (ERCOT), which oversees the state’s grid, said demand for power peaked at 73,756 megawatts, making it the fourth time this month that demand had set a record.
Growing demand for electricity – owing to a growing economy and an expanding population – emphasises just how important energy commodities are to modern life.
Top Trading Commodities: Future Market Outlook
Meanwhile, the near-term outlook for gold, silver and oil is murky, with Staunovo of UBS predicting the yellow metal’s volatility will continue, and the potential chance for new record highs before this year is out.
Until then, investors and others will continue to dig into the weeds of economics, policy and markets, all in an attempt to trade the top trading commodities.
