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GraniteShares

Research

Commodities and Precious Metals Report – Week Ending Nov. 16

Posted:
Topic: Gold , Commodities
Publication Type: Market Commentaries

Key points

  • Divergent performance between natural gas futures prices and other energy futures prices last week.  Natural gas prices soared, ending the week up 15.3% while WTI and Brent crude prices finished the week 6.2% and 4.8% lower, respectively.  Gasoline prices fell 2.8% and heating oil prices dropped 4.5%.
  • Base metal prices were mixed last week with copper and zinc prices increasing and aluminum and nickel prices falling.  Copper and zinc prices increased 4.1% and 3.4%, respectively, while aluminum and nickel prices fell 1.0% each.
  • Grain prices were also mixed last week.  Chicago wheat prices increased 0.6% while Kansas wheat prices fell 0.5%.  Corn prices fell 1.4% while soybean prices increased 0.6%.
  • Gold and silver prices were higher last week with gold prices up almost 1% and silver prices up 1.7%.  Platinum prices fell 1.9%.
  • Lean hog futures were the best performing futures contract last week, gaining 12.2%.
  • The Bloomberg Commodity Index outperformed the S&P GSCI again last week.  The Bloomberg Commodity Index increased 1.27% while the S&P GSCI fell 2.06%.  The Bloomberg Commodity Index’s lower energy exposure but higher natural gas exposure and higher base and precious metal exposure was primarily responsible for its outperformance.
  • Total assets in commodity ETPs increased $409.7. Gold                  ($128.1m), crude oil ($172.9m) and energy (ex-crude oil)                  ($266.1m) ETP inflows were offset primarily by broad commodity  (-$119.4m) ETP outflows.

Commentary

Up nearly 0.7% through Tuesday on expectations the U.S. Federal Reserve Bank would continue raising interest rates as a result of  a stronger-than-expected PPI report the previous week, the U.S. dollar finished the week down almost 0.5% after Federal Reserve Bank Vice Chairman Richard Clarida commented that interest rates are reaching neutral levels and that the U.S.Federal Reserve Bank needed to be aware of any slowing of economic growth. President Trump’s optimism over prospects of a favorable trade deal with China also helped weaken the U.S. dollar. At week’s end the U.S dollar decreased 0.5%, 10-year U.S. Treasury rates fell 12 bps to 3.06% and the S&P 500 Index lost 1.6%.

Crude oil prices moved lower once again last week over continued fears of oversupply and concerns of lower demand from slower global economic growth. Down nearly 7.5% through Tuesday, oil prices regained some ground after Wednesday’s EIA petroleum status report showed record demand for oil products and a drop in distillate inventories despite a large increase in crude oil inventories.    Natural gas prices surged on a combination of historically low inventories, record exports and frigid weather (actual and forecast) for a large part of the U.S.  Natural gas price volatility was extremely high last week, with prices up 31.6% through Wednesday but finishing the week up 15.3%.

Base metal prices benefited once again from a weaker U.S. dollar last week and expectations of favorable trade talks with China.

Gold prices moved higher last week supported by a weaker U.S. dollar, Italy – EU tensions, uncertainty over Brexit negotiations, U.S. sanctions on Saudi Arabia and a weaker U.S. stock market.  Silver prices moved higher with both base metal prices and gold. 

Soybean prices were once again buoyed by increased expectations of a trade deal with China.

Lean hog prices jumped higher last week over concerns of China’s ability to contain the swine fever outbreak.  Fears of swine fever spreading through Asia and perhaps the world pushed lean hog futures prices higher throughout last week.

Coming up this week      

  • Holiday shortened data week with mostdata released on Wednesday.
  • Housingstarts on Tuesday.
  • Durablegoods orders, jobless claims, existing home sales on Wednesday.
  • EIAPetroleum Report and Baker-Hughes Rig Count on Wednesday.

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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.

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