\n\tBy Chris Shaw<\/p>\n
\n\tWith investors again concerned over the potential for Europe's economic issues to spread beyond Greece, commodity markets have been hit in recent sessions, with the base metals and oil both trading lower.<\/p>\n
\n\tAs examples, Barclays notes copper prices dipped below US$7,000 per tonne this week for the first time since late February, while nickel fell below US$24,000 per tonne for the first time since early March. Both metals are now almost 13% below their April peak.<\/p>\n
\n\tCommerzbank suggests, aside from fears for more troubles from Europe, part of this weakness for the base metals is due to speculative investors reducing their net long positions. Other concerns regard the Chinese economy and its metal demand. A stronger US dollar has also contributed to the sell-off in the base metals.<\/p>\n
\n\tIn China, Commerzbank notes PMI data for the manufacturing sector in April came out weaker than the market had expected. Combined with the tougher lending requirements for banks recently announced this implies there could be some weaker commodity demand going forward.<\/p>\n
\n\tIf this were the case it would dampen import momentum for the metals, so removing a strong pillar of support for prices in the bank's view.<\/p>\n
\n\tBut the news is not all bad, Barclays Capital taking the view the sentiment driven price falls in the sector are not justified by fundamentals. Barclays suggests if some stability can be restored to broader market sentiment, then a rebound in metals prices would be justified.<\/p>\n
\n\tStandard Bank also points to some conditions that may prove supportive for base metal prices and copper in particular. The bank notes one side effect of the recent correction to London Metals Exchange or LME prices is the arbitrage between that market and prices on the Shanghai Futures Exchange has re-opened.<\/p>\n
\n\tThis has seen some arbitrage buying re-enter the market, though not at large enough levels at present to really impact on prices. But with Standard Bank expecting the copper market to tighten up and move into a significant deficit in 2011, it suggests any further sharp falls in copper prices are likely to trigger more sustained Chinese buying interest. This is especially the case given Chinese growth is likely to stay at solid levels given an official target of 8% GDP growth and with the global economy improving.<\/p>\n
\n\tThe sell-off in commodity prices has also pushed oil prices below US$80 per barrel, Commerzbank suggesting prices are likely to remain under pressure in the shorter-term given investor uncertainty and signs of ample crude supply in the US market.<\/p>\n
\n\tCommerzbank points out the latest American Petroleum Institute (API) data show US crude stocks rose by 3 million barrels last week. This was the 10th rise in a row and was a larger than expected increase.<\/p>\n
\n\tGiven this implies demand is falling short of expectations, Commerzbank remains sceptical the recovery of oil demand in industrialised countries expected by the market will actually happen at current price levels.<\/p>\n
\n\tIn contrast, Barclays Capital continues to view oil market fundamentals positively, arguing strong non-OECD demand growth is making up for the slow pace of recovery in OECD demand. This is keeping prices supported above US$80 per barrel.<\/p>\n
\n\tBarclays takes the view while recent Chinese PMI data proved a little softer than anticipated, there are enough other positive data to suggest continued strength in manufacturing activity. A moderation in growth can be expected simply because of the strength of the data in the first quarter of this year, but even allowing for this oil demand from China should remain strong.<\/p>\n
\n\tWith Europe's economic problems putting the euro under pressure, gold continues to hold up relatively well, thanks to its safe-haven status as investors flee other markets. The good performance from gold comes despite the International Monetary Fund selling 18.5 tonnes of the metal in March, more than triple February's volumes.<\/p>\n
\n\tCommerzbank notes the sale, and likely further sales of as much as 167 tonnes, has had little effect on prices as China has been one of the buyers as it looks to boost its gold reserves given they remain low relative to total currency reserves.<\/p>\n
\n\tStandard Bank is somewhat cautious on the outlook for gold however, noting scrap selling is rising at current price levels and seeing some risk from further US dollar strength against the euro. To reflect this, the bank favours selling gold into rallies, though it does suggest gold in euro terms is likely to outperform gold in dollar terms.<\/p>\n
\n\tAt present Standard Bank sees technical support for gold at US$1,162 per ounce and then US$1,152 per ounce, while resistance is seen at US$1,187 per ounce and then US$1,200 per ounce.<\/p>\n","protected":false},"excerpt":{"rendered":"
A glance through the latest expert views and predictions about commodities, which show divided views on the outlook for the base metals and oil prices in particular as well as for gold.<\/p>\n","protected":false},"author":9,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[23,27,24,22],"acf":[],"_links":{"self":[{"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/posts\/56575"}],"collection":[{"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/users\/9"}],"replies":[{"embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/comments?post=56575"}],"version-history":[{"count":0,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/posts\/56575\/revisions"}],"wp:attachment":[{"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/media?parent=56575"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/categories?post=56575"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/staging.fnarena.com\/index.php\/wp-json\/wp\/v2\/tags?post=56575"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}