Commodity prices expected to rally

Published: 9 December, 2012 14:14

Commodity trading graphRecent events in the commodity markets have given traders both food for thought as well as perhaps a chance to capitalise on recent movements in certain benchmark materials. Of primary note in recent days has been the recent sell-off of gold.

After a recent liquidation, many investment houses including Barclay’s have determined that this sell-of was indeed overstretched. Therefore, the bulls are eying the precious metal once again. If we then combine this with safe haven buying in reference to a weak Eurozone economy and the ongoing deliberations taking place over the United State’s fiscal situation, many online traders are viewing gold as having reached a relatively strong level of support.

Therefore the prices are expected to moderately rally in the coming week. If we combine this sentiment with rumours that the Fed is likely to increase balance sheet funding, there may well indeed be medium-term support for gold.

On the other end of the commodity trading spectrum, Brent Crude has once again seen values lessen as continued global economic output is still flagging. This relationship naturally correlates with less physical demand for the product as well as weak fundamentals.

While China reported a rise in industrial output, the mixed picture in the European financial markets caused a round of short covering which deflated the price per barrel. These figures are further engrained by the overall regional instability in the Middle East, a sluggish global economy and the approaching fiscal cliff in the United States.

Summarily, commodity traders will most likely keep a watchful eye on the price of oil for the remainder of the month while many online traders may opt to become involved in god for a short to medium-term trading position.

As is especially the case with online trading, the value of gold per ounce may be seen once again to rise considerably due to the liquid position many traders may choose to take.

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