Commodities Update 34

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Commodity prices have seen a strong recovery lately. Strong macro-economic data from US, coupled with rising stock markets, brushed side recession fears. Investors are speculating that commodities could have reached a cyclical bottom and be about to start a recovery cycle. Announcement from Chinese Government to maintain minimum GDP growth of 6.5% until 2020 provided support as well.

Oil price:

Declining Oil production in the US, and speculation of potential OPEC output reduction drove Brent Oil price to a 3-months high of $39.50, while WTI increased to $37.00. According to Baker Hughes (US Oil Service Company), further reduction in number of active US Oil rigs have provided price support as well.

Gold:

Last week Gold price increased to a 13-month high of $1,279.70 per troy ounce, which represents the best year-to-date performance since 1980. The historical negative correlation between stock markets and Gold price was broken last week. Recent demand has been driven by US buyers. In February 2016, Gold ETFs recorded its largest net inflows since 2009.

Palladium:

Recorded its highest price since November 2015, fueled by strong demand from US Automotive Industry. New car registrations in US increased 6,8% vs. February 2015. Global Automotive Industry consumes more than 50% of Global Palladium Demand. Therefore, markets expect future price development of Palladium to be closely linked to growth rates of the Chinese Automotive Industry.