24 Jan 2014
Commodity outlook: Broad risk off on weaker Chinese demand, gas prices up on US weather
FXstreet.com (London) - Commodity prices remain subdued on in a broadly risk-off environment with concerns over Chinese demand continuing to drag after yesterday’s flash PMI. China's HSBC Flash Manufacturing PMI fell to a six-month low of 49.6 in January, down from 50.5 in December. The sub-50 number indicates manufacturing has slipped into contraction.
While there have been many quick to point out that the Chinese lunar new year falls on 31 January, which could be responsible for some business slowdown ahead of a major holiday. However, the PMIs come as part of a bigger picture of softening Chinese data and tightening of conditions by Chinese policymakers.
Gold falls from short-term high
Gold has fallen from six-week highs after yesterday’s continuous jobless claims came in above expectations, with the number of Americans receiving unemployment benefits rose to 3.056m, above the 2.93 consensus expectation. Spot gold is currently trading at USD1,259.51/oz, down from yesterday’s high of
$1,266.51/oz.
Copper has declined to USD328.40/lb, down slightly on concerns over Chinese demand.
Natural gas prices remain bullish
Natural gas prices remain bullish on expectations of continuing below-normal US temperatures. Nymex natural gas for February delivery is currently trading at USD4.92, up 3.97 percent on the day and at a three-year high. With below-normal temperatures forecast to continue into February, further gas price rises will be driven by US inventories. In a report issued by the Energy Information Administration yesterday, it announced that US gas inventories dropped by 107 billion cubic feet to 2.423 trillion in the week ended January 17 – exceeding expectations of a 103bn decline. Supplies have decreased 37 percent in the past 10 weeks.
While there have been many quick to point out that the Chinese lunar new year falls on 31 January, which could be responsible for some business slowdown ahead of a major holiday. However, the PMIs come as part of a bigger picture of softening Chinese data and tightening of conditions by Chinese policymakers.
Gold falls from short-term high
Gold has fallen from six-week highs after yesterday’s continuous jobless claims came in above expectations, with the number of Americans receiving unemployment benefits rose to 3.056m, above the 2.93 consensus expectation. Spot gold is currently trading at USD1,259.51/oz, down from yesterday’s high of
$1,266.51/oz.
Copper has declined to USD328.40/lb, down slightly on concerns over Chinese demand.
Natural gas prices remain bullish
Natural gas prices remain bullish on expectations of continuing below-normal US temperatures. Nymex natural gas for February delivery is currently trading at USD4.92, up 3.97 percent on the day and at a three-year high. With below-normal temperatures forecast to continue into February, further gas price rises will be driven by US inventories. In a report issued by the Energy Information Administration yesterday, it announced that US gas inventories dropped by 107 billion cubic feet to 2.423 trillion in the week ended January 17 – exceeding expectations of a 103bn decline. Supplies have decreased 37 percent in the past 10 weeks.