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Global Situation So Bad That It Is Actually Good

September 27, 2012 at 16:00 by Andriy Moraru

The commodity markets are reacting with a moderate growth to the bad news coming out of both China and the USA today. The economic situation worsened so badly that the market participants are trying to pull a rally on speculations for further stimulus.

Chinese National Bureau of Statistics reported a fifth straight monthly drop of the industrial companies’ profits this August. They decreased 6.2 percent compared to August 2011. January-August 2012 to January-August 2011 decrease was reported at 3.1 percent. It should be mentioned that only profits of the big enterprises are counted in this report. Continued decline spurred market rumors that China’s government will activate stimulus measures soon to bolster the economy.

The United States have also discouraged the markets so deeply that investors began to expect more financial easing. Disastrous durable goods orders figures for August (a fall of 13.2 percent) and revision of Q2 GDP growth from 1.7 percent to 1.3 percent would have dropped the commodity markets under normal conditions. Now such reports may be are perceived positively.

Gold rose from $1,754.67 to $1,771.68 per troy ounce as of 15:52 GMT today. Oil (Light Sweet) gained from $90.02 to $91.24 per barrel. Copper advanced from $3.7055 to $3.7233 per pound. Even palladium is showing its first daily growth this week by going up from $624.65 to $632.25 per troy ounce.

If you have any questions and comments on the commodities today, use the form below to reply.

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