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26 Feb 2014
Commodities: gold trims highs, WTI up despite increased stockpile expectations
FXStreet (London) - Commodity markets have been subdued so far, with continuing concerns over Chinese demand.
Industrial metals subdued by lower China demand expectations
Iron ore prices broke below USD120/ton on their fifth-straight day of declines. The bearish trend brings prices to their lowest point since July 2013.
Declines were given momentum on reports that a number of major Chinese banks were curbing lending to the real estate market, with expectations of a resulting decline in steel demand hitting iron ore prices.
In addition, Beijing cut the CNY fixing rate further overnight, down another 0.01 percent to CNY61192. The latest cut from the People's Bank of China brings the fixing to the lowest level since 20 December and comes as the PBoC prepares to widen its trading bands.
The lower fixing and yuan depreciation trend weakens CNY purchasing power. The AUD saw some bearishness overnight on expectations that the weakening Chinese currency would hit demand for Australian commodities.
Gold trims gains
Gold has trimmed some gains after reaching 17-week highs, with UBS analysts today predicting that February will show the first month of net positive inflows into exchange-traded gold funds in a year.
Spot gold prices hit a 17-week high at USD1,345.46 yesterday, supported by continuing below-consensus US economic data boosting haven demand. While much of the below-par US data has been written off as caused by below-normal US temperatures and disruptive weather conditions, concerns remain as to whether the economy will regain growth momentum.
While the US is entering a cycle of relative tightening as the Federal Reserve continues its policy of tapering its current USD65bn a month quantitative easing purchases, Chinese conditions are helping to fuel investor demand for the precious metal as a store of value.
Crude gains despite stockpile expectations
WTI prices have rebounded after trading near a one-week low ahead of today's report from the US Energy Information Administration. Consensus expectations are that the report will show that crude inventories rose by 1.275m barrels last week.
Crude prices have gained 4 percent so far this month thanks to below-normal IS temperatures boosting heating demand.
WTI contracts for April delivery are currently trading at USD102.08/barrel, up 0.25 percent.
Industrial metals subdued by lower China demand expectations
Iron ore prices broke below USD120/ton on their fifth-straight day of declines. The bearish trend brings prices to their lowest point since July 2013.
Declines were given momentum on reports that a number of major Chinese banks were curbing lending to the real estate market, with expectations of a resulting decline in steel demand hitting iron ore prices.
In addition, Beijing cut the CNY fixing rate further overnight, down another 0.01 percent to CNY61192. The latest cut from the People's Bank of China brings the fixing to the lowest level since 20 December and comes as the PBoC prepares to widen its trading bands.
The lower fixing and yuan depreciation trend weakens CNY purchasing power. The AUD saw some bearishness overnight on expectations that the weakening Chinese currency would hit demand for Australian commodities.
Gold trims gains
Gold has trimmed some gains after reaching 17-week highs, with UBS analysts today predicting that February will show the first month of net positive inflows into exchange-traded gold funds in a year.
Spot gold prices hit a 17-week high at USD1,345.46 yesterday, supported by continuing below-consensus US economic data boosting haven demand. While much of the below-par US data has been written off as caused by below-normal US temperatures and disruptive weather conditions, concerns remain as to whether the economy will regain growth momentum.
While the US is entering a cycle of relative tightening as the Federal Reserve continues its policy of tapering its current USD65bn a month quantitative easing purchases, Chinese conditions are helping to fuel investor demand for the precious metal as a store of value.
Crude gains despite stockpile expectations
WTI prices have rebounded after trading near a one-week low ahead of today's report from the US Energy Information Administration. Consensus expectations are that the report will show that crude inventories rose by 1.275m barrels last week.
Crude prices have gained 4 percent so far this month thanks to below-normal IS temperatures boosting heating demand.
WTI contracts for April delivery are currently trading at USD102.08/barrel, up 0.25 percent.