Commodities face another buffeting this week with the US Federal Reserve meeting, statement and forecasts very likely to send prices in all directions.
Ahead of the meeting, last week saw oil prices fall, gold weaken, silver rise, copper remain solid and iron ore lose up to 5% by Friday’s close.
This week, more of the same and it’s all about inflation – how high, how long and bond yields – how high and for how long – especially in the wake of the $US1.9 trillion stimulus package approved last week and signed into law.
The Fed’s meeting, that package (first cheques to US taxpayers are now flowing) and the continuing skittishness of investors about too much spending and price pressures will make for a rough few days.
Gold, currencies and bond yields will take the brunt of the action – gold went down, then up
After trading to an intraday low on Monday of $US1,672, the following three trading days saw gold hit an intraday high of $US1,739.
The surge resulted from weakness in the US dollar and falling Treasury bond yields, as well as investors actively buying the dip.
On Friday that saw Comex gold down 0.2% on Friday settling at $US1,719.80 for gain on the week of 1.6%.
Silver fell 1% to $US25.99 an ounce (and dipped lower in after-hours trading), but had its first weekly gain in four weeks of around 2.7%.
Platinum gained 0.5% to $US1,200.41 an ounce and was up 6.3% for the week.
Copper ended up 0.4% at $US4.1570 a pound after settling at $4.14 a pound. Copper rose 1.4% for the week.
Oil on Friday settled weaker.
Global benchmark Brent futures fell 0.6% on Friday and in New York, West Texas Intermediate also dipped 0.7% for its first weekly decline in three weeks.
Both Brent and WTI down slightly for the week after rising more than 10% over the past two.
WTI settled at $US65.58 per barrel and Brent settled at $US69.20.
US rig numbers fell by one – total rig numbers dropped one to 402. That’s 390 rigs, or 49%, below this time last year.
US oil rigs fell one to 309 last week, while gas rigs were unchanged at 92.
The US Energy Information Administration last week trimmed its 2021 production estimate, hinting at a slower fall than previously thought.
EIA revised down 2021’s decline expected in crude production. Output is seen falling 160,000 barrels per day (bpd) in 2021 to 11.15 million bpd, a smaller fall than its previous monthly forecast for a 290,000-bpd drop
Iron ore prices slid sharply on Friday at the end of a week that saw losses of up to 5%.
The price of 62% Fe fines fell $US5.26 on Friday to $US165.44 a tonne. the price was down $US8.67 a tonne or 5%. The price dropped $US3.87 a tonne the previous Friday.
And the price of 65% Fe fines (mostly) from Brazil and delivered to northern China dropped 4.4 over the week to close at $US190.60 a tonne.
That was down $US3.70 a tonne from Thursday. 65% Fe fines had hit an all-time high of $US202.90 a tonne on March 4, so the price has fallen more than $US12 a tonne of 6% since then.