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Oil slips, Coffee lifts and Gold shines
Commodities went against the trend of weaker stock markets during the past week with the DJ-UBS Commodity index rising by 1.5 percent while the S&P 500 fell. Gains were seen across all the sectors, not least industrial metals where nickel and aluminium were strong performers. The energy sector was stronger led by gasoline and WTI Crude while agriculture sector received a strong boost from surging coffee prices.
Brent Crude – the WTI spread narrowed to $4.00 as the global benchmark for the energy market struggled. China demand falling off, one of the main reasons why Brent price is coming down, while Libya could come back on stream soon but the market appears to taking a wait and see approach. Meanwhile US production is at its highest level since 1988.
Coffee resumed its February rally on concerns that the global market will run into a deficit for the first time in five years. Arabica Coffee is currently up by 86 percent year-to-date, well ahead of Robusta coffee, the lower quality variety from Vietnam at 28 percent.
Gold managed to climb back above 1300 USD/oz after receiving a lift from several events: Minutes from the latest FOMC turned out to be less hawkish than what Yellen, the Fed chair initially had led us to believe. Safe haven buying on Ukraine tensions. The USD saw five consecutive days of selling against the EURO. US ten-year bond yields dropped back towards the lower end of its current 2.6 to 2.8 percent range.
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