Commodities and Precious Metals Update

Written by: Jeff Klearman | GraniteShares

Energy prices, except for natural gas prices, all moved sharply higher last week.  Gasoline prices again had the largest increase, rising 21.7%. WTI and Brent crude oil prices (July futures) increased 17.4% and 17.1%, respectively.  Gasoil and heating oil prices (July futures prices) increased 7.0% and 10.8%%, respectively.  Natural gas prices decreased 2.7%.

Grain prices were generally higher last week, with Chicago and Kansas wheat prices moving oppositely.  Chicago wheat prices increased 1.1% while Kansas wheat prices fell 0.6%.  Corn prices rose 0.2% and Soybean prices increased 0.1%.

Live cattle prices increased 8.5%.

Base metal prices, except for aluminum prices, all finished higher, with no aluminum, zinc or nickel trading on Friday because the LME was closed.  Copper and zinc prices increased 4.1% and 4.7%, respectively and nickel prices rose 3.1%.  Aluminum prices decreased 0.4%.

Gold prices increased 1.1%, silver prices rose 5.6% and Platinum prices fell 0.9%.

The Bloomberg Commodity Index gained 2.66% last week.  The energy sector was responsible for over half of that increase with base and precious metals sectors also strongly contributing.  No sector detracted from the performance of the index.

Total assets in commodity ETPs rose again last week, increasing $1.377.4m. The lion’s share of the increase once again came from gold ($1,242.0m). Other ETP inflows included silver ($96.2m) and  broad commodity ($60.7m).  Precious metals (ex-gold and silver) ETPs had a small outflow of (-$17.6m).


Both Wednesday’s ADP and Friday’s BLS employment situation reports showed over 20 million job losses in April with Friday’s BLS report also showing an increase in the unemployment rate to 14.7%, a level not seen since the Great Depression.  Nonetheless, U.S. stock markets moved higher last week, relegating the employment reports and Thursday’s jobless claims to history and instead focused on strong tech earnings reports, the continued re-opening of states and countries and an apparent easing of tensions between the U.S. and China.   At week’s end the S&P 500 Index rose 3.5% to close at 2,929.80, the 10-year U.S. Treasury rate increased 7bps to 0.69% and the U.S. dollar (as measured by the DXY Index) was unchanged.

The continued easing of lockdowns in the U.S. and throughout the world, portending increased demand, combined with production cutbacks in the U.S, Canada and OPEC+, moved oil prices sharply higher last week.  Friday’s Baker Hughes Rig Count report showed active oil rigs fell once again last week, decreasing by 33 to 292.

Only momentarily affected by concerns of increasing U.S.-China trade frictions, base metal prices moved higher on expectations of growing demand with reopening economies throughout the world.  Thursday’s report showing a strong increase in Chinese imports as well as an apparent easing in U.S.-China tensions also contributed to base metal performance.

An up-and-down weak for gold prices, pushed and pulled by a strong U.S. stock market, on-and-off-again U.S.-China tensions and a volatile U.S. dollar.   Higher on Monday on the back of increased U.S.-China tensions, gold prices fell through Wednesday with a strengthening U.S. dollar (the DXY index was up 1% through Wednesday).  A sharp decrease in the U.S dollar saw gold prices increase 2.2% on Thursday and then decrease slightly on Friday probably as a result of an apparent easing in U.S.-China tensions and strong U.S. stock market performance.

Soybean prices moved higher with China buying and corn prices benefited from higher oil prices and increased ethanol demand.   Frost forecasts were primarily responsible for the increase in Chicago wheat prices.

Live cattle prices moved higher as meat processing plants continued to re-open.  

Coming up this week      

  • Another light but interesting data week.  The Treasury will release updated budget numbers on Tuesday and details surrounding the Treasury’s new issuance of 20-year bonds will be released Thursday. 
  • CPI on Tuesday.
  • PPI on Wednesday.
  • Jobless claims and 20-year bond announcement on Thursday.
  • Retail sales, industrial production and consumer sentiment on Friday.
  • EIA petroleum report on Wednesday and Baker-Hughes rig count on Friday.

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