Bloomberg Median Forecasts
| Q1 2010 |
1105.00 |
|
Q3 2010 |
1160.50 |
| Q2 2010 |
1144.00 |
|
Q4 2010 |
1195.00 |
|
|
|
|
|
Commentary
Spot gold climbed to a fresh all-time high of $1,246.47 per troy
ounce on Monday, when investors euphorically reacted to weekend news
about China allowing the renminbi to become a more flexible currency.
The prospect of an increase in China’s purchasing power initially
sparked a broad rally across equities and commodities. Gains were pared
toward the end of the day, however, following a cautious reassessment
of China’s announcement. Although a flexible exchange rate is a step in
the right direction, key details were left out, casting doubt over
China’s willingness to let its currency appreciate to a level that could
meaningfully bolster export demand in the West. Even if China allowed
the renminbi to appreciate, would Chinese demand be as strong as we
really expect? Would it be sustainable? I think China would have to
introduce additional policies aimed at stimulating domestic growth
together with its flexible exchange rate policy. This may convince the
market that the country has a strong and sustainable foundation for
correcting global economic imbalances. Weaker-than-expected US housing
data and physical demand from Exchange Traded Funds (ETF’s) have also
supported gold. Holdings in New York’s SPDR Gold Shares rose by 5.17
metric tons to a new record high of 1,313.135 metric tons as of
Tuesday, while a separate report by Bloomberg showed that global
holdings of the metal by ETF’s climbed 6.2 metric tons to 2,050.6 tons
on the same day. The introduction of new ETF’s and physical demand from
central banks is likely to continue to support the price of gold as
well. ‘Fiat-currency concerns relating to the European sovereign-debt
crisis and excess liquidity should be positive for gold’ this year,
said Morgan Stanley in a report on Wednesday. [1] Anthony Grech, London
July Natural Gas Chart (24/06/10 12:00)
| Daily % Chg |
-0.21% |
|
3 months |
11.15% |
| 1 week |
-7.13% |
|
6 months |
-15.66% |
| 1 month |
17.64% |
|
1 year |
-22.26% |
Details
| Prev close |
4.804 |
|
52 week high |
6.491 |
| Last trade |
4.794 |
|
52 week low |
3.971 |
| High |
4.811 |
|
Low |
4.782 |
Bloomberg Median Forecasts
| Q1 2010 |
5.25 |
|
Q3 2010 |
5.20 |
| Q2 2010 |
4.73 |
|
Q4 2010 |
5.75 |
|
|
|
Commentary
Natural gas traded at $4.794 per million British thermal units on
Thursday morning, representing a 7.1% decline from last week’s update.
Given the commodity’s robust performance, it is not surprising to see
some profit taking; natural gas has outperformed most commodities over
the past month, climbing over 17% over the period on speculation of a
hot summer and on the view that the Gulf of Mexico oil spill will
accelerate the US’ move to other forms of energy. On Wednesday natural
gas rose for the first time in four days on the view that a heat wave
along the US East Coast will raise demand for gas-powered electricity
for air conditioning. Natural gas also rose on the back of news of a
storm approaching the US Gulf Coast – a development that may disrupt
gas supplies. The National Weather Service (NWS) on Wednesday revealed
that a cluster of thunderstorms have extended from eastern Cuba and
Jamaica to Puerto Rico and the northern Caribbean Sea. The NWS said the
chance for the storm to develop further is (for the time being)
moderate, however. It is important to monitor the potential for storms
in the US Gulf of Mexico since the region produces around 11% of
domestic gas output. Meanwhile, the US Energy Department’s weekly
natural gas report is scheduled for release later today. According to
Bloomberg, the report may show an 80 billion cubic feet rise in natural
gas supplies last week, slightly lower than the five-year average
increase of 85 billion. Gas storage gained 87 billion cubic feet to
2.543 trillion in the week ended June 11. Elsewhere, a Royal Dutch
Shell executive on Thursday said that global gas demand is poised to
increase by 25% over the next decade, despite uncertainty about the
recovery of industrial demand. ‘Global gas demand will rise by one
quarter by 2020… Of all primary sources of energy, natural gas is
clearly the most attractive hydrocarbon’, said Shell’s De la Rey on
Thursday. [2] Anthony Grech, London
July Copper (Comex) Chart (24/06/10 12:00)
| Daily % Chg |
1.33% |
|
3 months |
-11.57% |
| 1 week |
2.37% |
|
6 months |
-7.94% |
| 1 month |
-5.50% |
|
1 year |
24.82% |
Details
| Prev close |
293.55 |
|
52 week high |
369.10 |
| Last trade |
297.45 |
|
52 week low |
217.25 |
| High |
300.60 |
|
Low |
294.45 |
Bloomberg Median Forecasts
| Q1 2010 |
325.00 |
|
Q3 2010 |
304.50 |
| Q2 2010 |
313.00 |
|
Q4 2010 |
308.00 |
|
|
|
|
|
Commentary
The announcement that China would be more flexible in the valuation
of the renminbi sparked a rally in July copper futures, helping the
commodity gain nearly 2.4% on the week to $2.9745 per pound. The news
led investors to speculate that China is preparing to allow its
currency to strengthen against the US dollar, rendering copper, priced
in US dollars, relatively cheaper. A rise in China’s purchasing power
means the resource-hungry country could accelerate the development of
its infrastructure, spurring greater demand for copper. The price of
copper turned once investors realised that China wouldn’t allow the
renminbi to appreciate rapidly and after questioning whether a stronger
renminbi would even equate to more demand for the metal. Copper prices
took a further hit on Wednesday when new home sales in the US plunged a
record 32.7% in May. With an excess capacity of homes building up in
the US and less building permits being issued, US demand for copper is
likely to weaken over the coming months. There is a good chance that
China will provide further details of its recent currency move,
nevertheless, and this could provide copper with a short-term boost. Anthony Grech, London
Notes: Source: [1] Bloomberg News (23 June 2010) [2]
Reuters News (24 June 2010). Chart data sourced from Bloomberg.
Bloomberg Median Forecasts are produced by Bloomberg by taking the
median level from rates forecast by a number of contributors. These
contributors consist of leading banks and security firms.
|
