• Crude oil surged for biggest monthly gain since 1999 easing economic downturn
• Michigan Surveys of Consumers reading on consumer sentiments stand at 68.7
• Copper surged a slumping dollar and equity gains boosted demand
Gold climbed above $980 per ounce as traders bought the metal as a hedge against weakness in the dollar,
which fell to five-month lows against a basket of currencies. The re-establishment of bullion's inverse correlation
with the dollar had put further milestones in view. If the dollar continues to be sold, the first obvious target is
$1,006 an ounce. Moreover Silver prices are benefiting from strong investment demand for the metal, with
buying of silver-backed exchange-traded funds soaring since the beginning of 2009 and speculative net long
positions on the COMEX futures exchange rising. While industrial and photographic demand for the metal is
lackluster, investors are buying the metal as a cheap proxy for gold.
Crude oil jumped above $66 per barrel after strengthening economic data suggested the economic downturn
may be easing. Influencing inventories data by the U.S. Energy Information Administration on U.S. crude oil
stocks, which tumbled by 5.4 million barrels in the week, was highly supportive. OPEC's decision to hold oil
production steady also helped prop up prices. The producer group kept its output targets unchanged as
expected, betting on a strengthening world economy and tentative signs of increased demand.
Optimism over the U.S. government's stimulus programs to combat the recession lifted consumer confidence in
May to its highest level in eight months, according to a survey showed. The Reuters/University of Michigan
Surveys of Consumers said its final May reading on consumer sentiments was 68.7, higher than an early May
figure of 67.9 and a final April reading of 65.1. This was slightly above economists' median expectation of a
reading of 68.0, according to a Reuter's poll. Consumers' outlook over the next 12 months and five years also
jumped since April, spurred by confidence in President Barack Obama's economic stimulus measures such as
rebate checks and extension of unemployment benefits.
Copper was up on back of the weak dollar against the euro and economic optimism remained upbeat after a
batch of data suggested the global recession may be easing. Japanese industrial production rose 5.2% in April on
a monthly basis, and the government said it expected continued gains through June. U.S. growth data also
reinforced the sense that the global economic slump might be abating. Copper's gains slowed after data showed
business activity in the U.S. Midwest shrank in May much more than expected. Moreover London Metal
Exchange warehouse stocks slipped 4,850 tonnes to 312,275 tonnes. Elsewhere lead rose 5%, tracking an
industrial metals rally as rising equities and a weak dollar boosted markets, moreover supply issues were also
supporting prices.
0 comments:
Post a Comment