Commodities

Oil prices ended with a modest gain on Friday but notched up a loss for a second week as traders continued to assess the outlook for energy demand in the wake of the China-US trade deal and final Senate approval of the US-Mexico-Canada trade pact.

Gold futures rose on Friday but barely budged for the week as the strong gains in sharemarkets around the world undermined the appeal of safe havens such as gold and silver.

Whilst US equity prices are currently at all-time highs, commodity prices by comparison are as cheap today as they have been for decades. Commodities have not enjoyed the same boost from ‘easy money’ and asset-boosting policies like quantitative easing, that stock prices have seen.

The earlier timing (January 25) of the Lunar New Year week-long break has had a dramatic impact on Chinese imports volumes (which will be repaid with a sharp slide in volumes for January next month) – imports of iron ore, LNG, copper, coal, and soybeans all rose sharply in December, while oil shipments were just under the highs seen in November.

After a stellar 2019, where will gold prices go in 2020? Well, the metal’s biggest bulls, The World Gold Council reckons it’s up (as you’d expect), and it will be driven by what it calls “the interplay between market risk and economic growth.”

Rising tensions between the USA and Iran have not prevented spot uranium from sliding further in early 2020.

A weakening in the value of the US dollar towards the end of 2019 (it ended around 6-month lows in late December against some currencies such as the Aussie dollar), plus supply constraints and other concerns helped most commodities end the year and decade with solid gains.

While Vale, the big Brazilian iron ore miner, and exporter will be boosting sales in 2020, the impact of any increase will not be felt until the back half of next year as the company slowly rebuilds its ore inventories.

In what could be the first of many reports from US energy companies, the giant Chevron Corp says it will write down the value of its US gas assets by more than $US10 billion when it reveals its 4th quarter figures next January.

Ahead of the Herd’s Rick Mills explains why resource sector investors can’t afford to be blase about the growing global rift between rich and poor.

China is heading for its 4th year in a row of iron ore imports topping 1 billion tonnes with non-Brazilian exporters – mostly in Australia – able to make up for the multi-million-tonne shortfall from Brazil’s Vale in the wake of the January 25 mine dam wall disaster.

Desperate OPEC and Russia have lifted the size of their daily production cap to try and offset a rising global oil glut that threatens to send prices lower in early 2020.

Watch the share prices of local gold stocks like Newcrest, St Barbara, Evolution, Northern Star and Saracen after a big fall in futures prices on Friday.

Commodities had a mixed month as key factors such as risk re-emerged, despite the continuing trade tensions between President Donald Trump and China, Brexit and the UK election and problems in Spain and Hong Kong.