Gold And Oil Back On The Rise
The bond markets did not trade today in observance of Columbus
Day. Bonds fell sharply on Friday after a jobs report showed that
unemployment dropped more than expected, and after the jobs number from August
was revised to a higher number.
The yen hit eight-month lows today against after North Korea
announced a successful nuclear bomb test late in the day on Sunday, U.S. time.
The yen also declined significantly against the euro, as the effects of a
nuclear-capable North Korea reverberated throughout the world.
International critics were quick to denounce the rogue communist state, with the
notable exception of Iran, who blamed the U.S. for pressuring North Korea into
the test. The yen has weakened considerably over the summer, as interest
rates and inflation remain the main concern of currency investors. The ECB
is set to raise rates again before the year is out, the Fed’s prospects to raise
look unlikely, while the possibility of Japan raising rates looks to be very
slim.
Crude oil futures rose 1.4% to close at $60.59 after OPEC
announced that six countries would indeed cut production to trim losses stemming
from the 25% decline in the price of oil from July’s highs. Oil reached a
record $78.40 a barrel over the summer, as North Korea tested missiles and a war
in Lebanon raised fears that the global supply of oil could be cut dramatically.
Since the steep decline, OPEC has issued warnings that the agency would make an
effort to keep prices up, and they seem serious to do so, today naming six
countries that are seriously considering a cut. Natural gas rose 2.4%
today, the 7th straight gain, after temperatures dropped across the central U.S.
Natural gas is used to heat and cool homes, and temperature and weather
forecasts heavily influence the price of the energy.
Gold future rose 1% to close at $582.80 as North Korea’s
nuclear test spurred demand in the safe-haven futures contract. Demand for
safe-haven commodities increases during times of geopolitical crisis, and North
Korea’s tests drove demand for the metal. Gold and oil have been trading
lock-step through the summer, so OPEC’s intentions to cut production also helped
to push gold higher.
Softs traded mostly lower today. Cocoa fell nearly 1%,
coffee fell 0.8% and orange juice fell 0.3%. Sugar stood out against the
crowd, trading higher by nearly 4%.
Grains traded higher across the board. Corn rose nearly
7%, wheat also rose nearly 7%, soy rose nearly 2% nad oats rose 5%.
Meats traded mixed, with cattle down 2% and porkbellies up
0.5%.
A round of economic reports was released
today.
Check them
here.
John Patrick Lee