Commodities Rebound and Gold Still Looks Like a Safe Haven to Investors
Commodities rebounded in recent trading activity, with oil rising 1 percent on book squaring at the end of a volatile period. The metals and most agricultural markets also posted gains.
The rebound came even as the dollar strengthened due to the euro zone’s fiscal woes. In the commodities markets, corn, copper and gold were among other major gainers.
Corn jumped to its highest level since April 27 on forecasts for more wet weather and flooding in the US Midwest Corn Belt. Corn’s benchmark contract, traded in Chicago, settled up 1.5 percent. In recent trading activity wheat was up 10.5%.
Also, gold futures market saw a 1.5% rise on safe-haven buying as spread trading investors fretted about euro zone debt after Fitch cut Greece’s credit ratings.
Bullion fell before turning higher after Fitch downgraded Greece’s rating and as the International Monetary Fund urged Europe to agree to more comprehensive measures to tackle the debt crisis.
The metal is still 4 percent lower after rallying to a lifetime high near $1,575 an ounce in early May. Silver remained down 30 percent from the record $49.51 hit on April 28.
Many traders expect the natural gas storage gap compared to last year and the five-year average to shrink in coming weeks, as nuclear units return to service after planned spring maintenance, freeing more gas supply to pump into inventory.
The EIA expects storage injections this stock-building season to total 2.29 tcf, the largest April-through-October build since 2003. That would drive domestic inventories to an all-time high near 3.87 tcf by next winter.
If weekly stock builds through October match the five-year average pace, inventories will begin next heating season with about 3.567 tcf in the ground, about 7 percent below last November’s record of 3.84 tcf but about average for that time.
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