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Syria tensions easing while sugar may have found a sweet spot
The two main factors driving commodities this week has been the easing of tensions in Syria and the gearing up for the FOMC meeting; these key events saw gold, silver and and brent drop. But there were other aspects pushing the markets too, one being Brazil, where sugar rose because of increased fears of a slowdown in production there.
Saxo Bank’s Ole Hansen explains that sugar is now getting close to a technical break, which could indicate an end to the multi-year down trend.
Meanwhile, Gold dropped 5.8 percent and and Silver fell 8.6 percent. They were the two worst performing commodities overall, and Ole says that the FOMC jitters were behind this. The Federal Reserve meets on 17-18 September and tapering is expected to commence this month.
Brent Crude was also down because of geo-political tensions; a military strike in Syria has been averted but tough negotiations still lie ahead. But Ole warns that Libyan oil is still not flowing, and this has caused OECD stock levels of crude to drop to the lowest level in two years.
Ole says that until these issues are resolved, crude should find support around the USD 110 level. Looking ahead, he says the International Energy Agency sees oil demand rise next year.
02:01 minutes
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