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Weekly Commodity: The rally of almost all the commodities appeared tired

SMC | 27 Dec, 2016  | Follow Author | Add to my Favourites 
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Weekly Commentary


Before Christmas and year end, the rally of almost all the commodities appeared tired. Volumes were low and investors were interested in riskier asset. Further upside in dollar index also stole the shine of commodities. It ended the week above 103 levels. It was not a good week for bullion counter; gold saw seven week continuous downside and traded below the level of 27000 in MCX. Additionally silver traded below the mark of 39000 on the weakness of gold and base metals. Investment demand was strong in 2016 for gold but at the same time poor physical demand dragged down the prices. American Eagle gold coin sales rose to a five-year high in 2016, according to U.S. Mint, after a volatile year that saw prices soar 30% in the first seven months, only to tumble in the wake of U.S. President-elect Donald Trump's election victory. Total sales of American Eagle gold coins in 2016 reached 985,000 ounces. In the energy counter, spread between WTI and Brent minimized. WTI closed on positive note whereas Brent prices further moved down. The EIA reported a build of 2.3 million barrels in U.S. commercial crude oil inventories last to last week. Natural gas prices strengthened on inventories dropdown. The EIA reported a storage draw of -209 Bcf, bringing the total storage number to 3.597 Tcf as compared to the -32 Bcf draw last year and the -110 Bcf draw for the five-year average. Base metals gave up their strength on the upside in dollar index; it was only aluminum, which closed the week in positive zone owing to the strength in crude prices. London copper edged back towards one-month lows hit earlier this week as the upcoming Christmas holidays drained markets of liquidity and direction. Zinc prices augmented. China's zinc smelters are accepting record low fees to produce metal amid a shortage of ore, while winter mine closures are likely to force plants to cut output early next year. The sharp drop in fees signals a long-heralded zinc market shortage may be closer to reality.

Bearish pressure was there in oil seeds and edible oil counter on weakness in international market. Dull activities in spot market amid poor export demand compelled all the spices to trade in the lower territory.

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Disclaimer: The author has taken due care and caution to compile and analyse the data. The opinions expressed above are only the views of the author, and not a recommendation to buy or sell. Neither the author nor accept any liability whatsoever arising from the use of any of the above contents.

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