Commodity Exchange November Wrap: Focus on Previous Metals, Crude Oil, Zinc and Wheat.

By Chinedu Okoye 

Summary: 

• Precious Metals gain in the month of November as Fed rate cuts bet wiegh and uncertainty attracts Investors to safe haven assets.

• Crude Oil seems officially in a bear market as price declines persist even though supply cuts remain and middle east tensions remain. 

• Agricultural products segment of commodities stay elevated and are expected to stay so in the nearest future. 

• Zinc and other solid minerals trade sideways as interest rate weigh in on New home sales.




The month of November saw continuous rises in the price of Gold. The yellow metal rose 4.46% to 2072.12 from the 1900s level. This comes on the back of key economic data and sentiment that indicate interest hikes may be over. 

Latest job numbers came in at 150,000 as opposed to a 180,000 estimate, just as well inflation came in last week as expected. Core inflation stood at 3.5% and headline CPI was at 3%. The US 10 year Treasury yields are also fen from the 5% high seen in October. 



Silver:

Silver has also maintained a strong price momentum, gaining 4.56% on the week and 10.5% month-on-month. Chart 2 and 3 depict the weekly and monthly price moves respectively. 

(Chart 2)




(Chart 3)



Crude Oil:

Crude Oil has taken a hit in the past month after rising to above $90/barrel in October on both Brent and WTI benchmarks, oil prices have fallen below $80 in the past two weeks and stayed there for the remainder of the month. 


(Chart 4)


Brent Crude fell 6.41% on the month, and WTI fell 7.96% on the month. This is even as OPEC extends output, and tensions in the middle east persists.  



(Chart 5)



Zinc:

Zinc has largely traded sideways gaining 0.44% to 2519.00 in the month of November. With high interest rates and home prices, new home sales have declined as well as construction, China's property market saga also adds downward pressures to building materials. 


(Chart 6)



Wheat:

Wheat has traded strongly in the last month gaining 4.04% to 601.75 as of Fridays close. 

(Chart 7)


Summations:

The strong price increases seen in Gold and Silver are supported by fundamental indicators, with Fed Funds (U.S. benchmark) rates expected to hold or even to lower as earlier as next year. 

That bodes well for precious metals in uncertain economic times, but further increases from its new all time highs is suspect, according to analysts at Zero Equilibrium. However, gold could close out the ear above $2000. 

OPEC production cuts are expected to be extended in the nearest future, but with Russia's Oil priced at a discount, two of the worlds top ten oil importers; India and China have benefitted from this price decrease. Russia produces 10% of the world Oil and Gas resources. 

Zinc is expected to trade sideways for the rest of the year as the effects of interest rates hikes begin to materialize and house prices stay abnormally elevated. I am however bullish on agricultural products like wheat. 

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