Commodities Update 21
Gold loses nearly all of its gains; copper prices under pressure
The performance of oil prices was mixed on Monday. In the morning prices showed a positive development in contrast to a downwards trend in the afternoon. WTI decreased by 0.14% while Brent lost 0.25%.
On Friday oil prices reached the lowest level since the end of August, after surprisingly weak retail sales in the USA and a stronger-than-expected increased oil supply were announced. Especially Russia, Iraq and Saudi-Arabia are responsible for the record high. The IEA refers to it as an unprecedented buffer against geopolitical shocks and unexpected shortage.
Economists seem to think that the terrorist attacks on Paris will not have a strong impact on global economy. According to Malcolm Barr, analyst at JP Morgan, the macroeconomic effect will be short-lived, as long as this has not been the beginning of a sequence of attacks.
Gold prices nearly reached their third-quarter-low at the beginning of this week. According to Ole Hansen, Saxo Bank, prices will react sensitively on news regarding the conference of the Fed in the next weeks.
Copper prices decreased to 4,740 USD, the lowest levels since about six years. Since the high of 10,000 USD in 2011, prices have decreased parallel to China’s economic development. In addition to China’s weakness, negative news from Japan have pressured copper prices. Japan got into the second recession during the mandate of Shinzo Abe. Japan is the second largest Asian consumer of base metals.