Oil and precious metals awakens as dollar weakens

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Global commodities markets are gradually recovering despite soaring cases of the COVID-19 pandemic. Oil prices are high, the agricultural market are mixed while the precious metals regained their safe haven positions.

ENERGY

  • Last week, Crude oil prices settled higher, after Hurricane Laura largely spared the
    U.S. energy industry from disaster — turning the focus again toward sketchy fuel
    demand in a Coronavirus-moderated economy.
  • Aside from loss of at least six lives and countless property, Hurricane Laura also
    scored a near-direct hit on Lake Charles in Louisiana, where Citgo’s 769,000 barrelsper-day refinery is located. Fortunately, all the refinery’s employees were safe and damage was being assessed, indicating the situation was under control.
  • In this context, market participants will return their focus towards the recovery in
    global energy demand, which continues to show signs of stalling.
  • This comes amid virus flare-ups in Europe and Asia, which threaten to derail the
    recovery in demand growth.

Oil and precious metals awakens as dollar weakens - Brand Spur

This week, we expect oil prices to nudge slightly above its present levels, driven jointly
by the recent weakness of the greenback (i.e. the USD) against other major currencies,
and the expectation of improved energy demand as many countries begins to re-open
educational institutions.

AGRICULTURE

  • Last week, the price of Wheat increased by 2.33% w/w to close at $539.00 per bushel, as UK experiences worst wheat harvest season in 40 years, buoyed by poor quality harvests due to droughts earlier in the season, followed by lots of rain in August.
  • Similarly, Corn prices gained 5.81% w/w to close at $346.00 per bushel, buoyed by
    China’s demand for corn to feed animals as its pig herd has rebounded more quickly
    than expected from a deadly swine disease first detected in the country two years
    ago.
  • The price of Cocoa also gained 9.48% w/w to $2,692.00/MT, driven by steady rise in
    global demand.
  • However, Sugar price shed 1.79% w/w to settle at $12.60/lbs., due to the prevailing
    weakness of the Brazilian currency.
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Oil and precious metals awakens as dollar weakens - Brand Spur

This week, we anticipate an increase in the price of Wheat, supported by low supply.

METAL

Last week, the price of gold rebounded, notching its first weekly gain in three weeks, as investors continued to assess the Federal Reserve’s change to its monetary policy strategy (It simply seeks to move inflation back toward two percent— balancing its pursuit of price stability with achieving the other leg of its dual mandate, maximum employment). Consequently, Gold prices contracted by 1.43%w/w to close at $1,974.90/oz while Silver was up 3.29%w/w to $27.61/oz.

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Oil and precious metals awakens as dollar weakens - Brand Spur

We anticipate that a weaker dollar, massive amounts of stimulus; and the increased
demand for inflation hedges are likely to continue to make precious metals well sort
after this week, sustaining their safe haven positions.

LIVESTOCK

Oil and precious metals awakens as dollar weakens - Brand Spur

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Oil and precious metals awakens as dollar weakens - Brand Spur

GTI RESEARCH

 

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