Archive for September, 2012

Commodities slump after sharp dip in oil markets

Tuesday, September 18th, 2012

Oil barrelLate trading on Monday saw oil prices plummet briefly as the benchmark WTI price lost $4 in a few minutes, fuelled by rumours of a possible release of stocks from USA strategic reserves.

Coming in the wake of the Federal Reserve’s latest round of quantitative easing, with which Chairman Bernanke has promised to inject a further $40 billion monthly into mortgage-backed securities until employment figures improve, this latest shock underlines the skittish state of commodity markets.

Prices across energy and precious metals markets had been rising in anticipation of last Friday’s FOMC announcement, with gold peaking above $1770 before retracing 0.7% on the London spot market in the space of 22 minutes. Silver fared worse, with a 1.6% decline.

Continued weak European economy

Tuesday, September 4th, 2012

European Union Brussels headquarterThis week’s commodity trading news serves not only to underpin the continued weakness of the European state of affairs but once again ties together the intimate relationship of commodities based on the strength of the dollar.

Ben Bernanke

Comments by Ben Bernanke at the latest conference in Jackson Hole seemed to hint that a further round of quantitative easing may be in the books for the near future; possibly as early as September’s FOMC meeting.

This has resulted in a substantially bullish outlook on the gold markets and the yellow metal’s price has hit a five-month high and many see gold testing 1700 dollars an ounce shortly.

These increased expectations for another round of quantitative easing (QE3) are seen as a bullish upside for most commodity traders while conversely the action is bearish for the US dollar.