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Wednesday, May 25, 2022

Commodities: Gold, oil falter in Europe, cocoa futures extend losses

LONDON (ShareCast) – (ShareCast News) – Oil and gold continued to falter in Europe on Friday, extending the bearish sentiment overhang from Asian markets as the weekend close approached. At 1351 BST, COMEX gold for August delivery was down 1.08% or $ 11.80 at $ 1,082.30 an ounce, while spot gold was down 0.75% or $ 8.19 at $ 1,082.51. As the decline continued unabated, investment bank Macquarie downgraded its full-year aggregate forecast for gold to $ 1,152 an ounce, down from $ 1,310, suggesting the yellow metal could fall as low as $ 1,075 over the third quarter before recovering.

“Gold has always had a dual nature as a currency and a commodity. At present it is not desired in either form as the US Federal Reserve remains on course to raise rates, while physical markets are lacklustre. The price fall has been extreme – taking it to a five-year low – but might not be over yet,” the bank added.

COMEX silver was also down 1.67% or 25 cents at $ 14.46 an ounce, while spot platinum continued its worrying slide down shedding another 0.15% or $ 1.44 to $ 976.41 an ounce.

Industrial metals slipped firmly into negative territory with leading futures contracts trading lower on the London Metal Exchange. Past the midway point in trading, three-month contracts of primary aluminium (down 0.8%), copper (down 2.1%), lead (down 0.8%), nickel (down 0.8%), tin (down 0.3%) and zinc (down 0.9%) summed up a dire afternoon.

In particular, aluminium and copper were trading at six-year lows of $ 1637.50 and $ 5240.25 per tonne respectively.

Meanwhile, both oil benchmarks were enduring a tepid day with the WTI staying well below $ 50 a barrel, as ratings agency Moody’s opined that low oil prices were “here to stay.” The Brent front month contract was broadly flat, trading down 0.04% or 2 cents at $ 55.25 a barrel, while the WTI was up 31 cents or 0.64% at $ 48.76.

Elsewhere, the agricultural commodities market saw a mixed session. CME live cattle (up 0.22%) and cotton (up 0.08%) contracts were trading higher while CBOT corn (down 1.35%) and wheat (down 1.05%) were trading lower.

However, the cocoa market sell-off appeared to be more pronounced compared other agricultural contracts, with aggressive weekend profit-taking in the face of lacklustre demand. ICE cocoa for September delivery was down 1.36% or $ 44 at $ 3,197 per metric tonne.

A poll of analysts by Reuters pointed to the current oversupply stack swelling to its highest level since 2010, thereby fanning expectation of a decline of more than 8% by end of the fourth quarter of this year.

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