Gold prices (XAUUSD:CUR) held steady on Monday after their worst sell-off in 3-1/2 years, as markets braced for the Federal Reserve meeting where it is widely expected to keep its benchmark interest rate steady, while oil prices were little changed with Brent (CO1:COM) trading below $80 a barrel.
Data showing China’s central bank paused gold purchases, coupled with a strong U.S. jobs data, dented bullion’s appeal, pushing it down 3.5%, its worst since November 2020.
Gold prices registered their fourth-consecutive month of gains in May, hitting fresh record highs time and again, in part driven by strong central bank buying across the world, and the ongoing geopolitical events in the Middle East, which has to some extent offset pressure from expectation of higher-for-longer interest rates.
The Bloomberg Commodities Total Return Index reportedly slumped by 5% in the week to June 4 with all sectors suffering declines after a stronger dollar and rising bond yields helped sour sentiment.
On an individual sector level, losses were led by energy, where crude oil slumped around 8% after OPEC+ made an ill-timed decision to discuss production hikes from October. This resulted in the Brent Crude net long slumping to a ten-year low, inadvertently setting the stage for a recovery once the technical and/or fundamental outlook improves, Saxo Bank’s Ole Hansen said.
“The WTI and Brent crude oil long slumped to a six-month low at 198k, led by a 69% drop in the Brent long to a ten-year low at just 46k. Only on two occasions in the last 12 years has the crude oil exposure been this weak, and on both occasions, a strong rebuild of longs occurred in the months that followed.”
Investors’ focus turns to the U.S. Federal Open Market Committee meeting, which starts on Tuesday, and the Wednesday’s CPI data.
In the agricultural commodities space, wheat futures extended declines. “CBOT wheat extended losses for an eighth consecutive session on Friday on reports that Turkey will suspend wheat imports for the next four months to protect domestic producers from weaker prices during the harvest period,” ING analysts said. While Turkey is a prime buyer of Russian wheat, good progress in the U.S. winter wheat harvest is adding pressure to wheat, the brokerage noted.
Recent Commodity Price Movements and A look At Some ETFs
Energy
Metals
- Palladium (XPDUSD:CUR) +0.06% to $901.50.
- Platinum (XPTUSD:CUR) +0.35% to $973.30.
- Gold (XAUUSD:CUR) +0.10% to $2,295.38.
Agriculture
- Corn (C_1:COM) +0.37% to $450.40.
- Wheat (W_1:COM) -0.64% to $623.48.
- Soybeans (S_1:COM) +0.33% to $1,181.11.
Commodity ETFs
Gold ETFs:
- SPDR Gold Shares ETF (GLD)
- VanEck Gold Miners ETF (GDX)
- VanEck Junior Gold Miners ETF (GDXJ)
- iShares Gold Trust ETF (IAU)
- Direxion Daily Gold Miners Index Bull 2X Shares ETF (NUGT)
- Sprott Physical Gold Trust (PHYS)
- iShares Silver Trust ETF (SLV)
- Sprott Physical Silver Trust (PSLV)
- Global X Silver Miners ETF (SIL)
- U.S. Copper Index Fund, LP ETF (CPER)
- abrdn Physical Palladium Shares ETF (PALL)
Oil ETFs:
- U.S. Oil Fund, LP ETF (USO)
- Invesco DB Oil Fund ETF (DBO)
- U.S. 12 Month Oil Fund, LP ETF (USL)
- U.S. Brent Oil Fund, LP ETF (BNO)
- U.S. Natural Gas Fund, LP ETF (UNG)
- U.S. Gasoline Fund, LP ETF (UGA)
Agriculture ETFs:
- Invesco DB Agriculture Fund ETF (DBA)
- Teucrium Soybean ETF (SOYB)
- Teucrium Wheat ETF (WEAT)
- Teucrium Corn Fund ETF (CORN)
