Gold is still in red
The outlook for the whole commodity sector remains extremely positive and this is causing headaches for many companies who are now facing sharp price rises for many raw materials.
Oil is showing strength as investors bet on a quick and full recovery of the market with inflation risks also helping drive the price up.
Soft commodities are one of the big winners of the last few weeks as demand has surged. Corn is up >40% YTD, while the majority of agricultural commodities are showing double digit gains YTD.
Palladium has been pulled up by demand for catalytic converters for cars with its price reaching a record high of $3,000 earlier this week. This increase in demand is exacerbated by the prospect of the massive supply shortage seen in the last few years set to worsen after Nornickel, the world’s largest producer of the metal, announced that it will miss its production forecast.
The only exception is gold which is still in red YTD. Even so, gold has absorbed the decline triggered by Janet Yellen’s speech two days ago with the price now back close to the resistance area at $1,800. A clear break through this zone would open space for further recoveries.
Carlo Alberto De Casa– Chief analyst, ActivTrades
European markets extended gains on Thursday with most indices still in green territory as investors digested the last solid batch of corporate results. Banks and automakers led gains today following reassuring results that topped estimates from both Société Générale and Volkswagen. Risk appetite is back on track following Janet Yellen’s clarification about her comment about a possible rate hike, which was welcomed by investors. Nevertheless, despite the current reassuring earnings season, traders’ focus remains on monetary policies and stimulus spending as the prospect of pressure from rising prices remains alive and is only likely to increase in the coming weeks, especially as many economies start looking beyond the pandemic. In the very short-term, investors will pay attention to both the BoE meeting and inflation report in the UK as well as the initial jobless claims in the US, which will serve as a key indicator prior to tomorrow’s NFP.
Pierre Veyret– Technical analyst, ActivTrades
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