Hotline Blog

  • Gold edged lower, but the other precious metals explode on the upside
  • The dollar index rises to a new high and puts in a bullish reversal on the weekly chart
  • Energy commodities post gains across the board
  • Wheat falls, but corn and beans post marginal gains with soft commodities and meats mixed
  • Stocks rally, Bitcoin and cryptocurrencies fall- Have a great holiday weekend!

The story of this week:

 

Silver And Platinum Start To Move

 

August came to an end on Friday, and the dollar index closed the month at a new high as it put in a bullish reversal trading pattern on the weekly chart.

Source: CQG

As the weekly chart shows, the US dollar rose to its highest level since May 2017. President Trump expressed his anger at the higher level of the greenback, pointing his finger at the US central bank.

Source: Twitter

Typically, a strong dollar weighs on the prices of precious metals, but gold settled the week at $1529.40 on the active month December COMEX futures contract after rising to a new high at $1565 on August 26. Gold remains strong, but the story of the final week of August was in the other precious metals.

The wild bull markets in palladium and rhodium continued over the past week. Palladium futures in December rose to settle at $1539.20, over $80 higher on the week. Rhodium exploded to just under $5000 per ounce, which was around $1000 per ounce above the previous week’s close. And, silver and platinum also posted impressive gains.

The price of silver took out the 2018 highs at $17.705 per ounce and flirted with the 2017 peak at $18.655 rising to a high at $18.615 on the nearby futures contract.

Source: CQG

The weekly chart highlights that silver played catch up with gold. The next level above the 2017 high is the 2016 critical level of technical resistance at $21.095. December silver futures settled at $18.342 on the final day of August.

While silver moved higher, the sleeper of the sector also made a move to the upside over the past week.

Source: CQG

Platinum rose to a new high for 2019 when the price traded to $944.20 and settled the week at $931.70 per ounce on the October futures contract. The next level to watch on the upside is the 2018 high at $1022.60 per ounce. Platinum rallied as both of the other platinum group metals did even better on the week. Palladium rose by over $80 per ounce to settle at $1539.20 on the December futures contract. Rhodium posted a massive gain of around $1,000 per ounce as the price rose to the $5000 level. Some analysts project that the price of rhodium, which is a byproduct of South African platinum output could rise to the $10,000 level. The rally in all of the precious metals in an environment where the dollar index is making new highs is a sign that the bull market is for real. Precious metals are rising in all currency terms. During the last week of August, the price of gold traded to a new record high in euros.

The higher the metals move; the odds of significant corrections will rise. However, the bull market in the sector is a continued sign that the value of all currencies, including the US dollar, are falling.

 

 

Highlights in commodities:

 

  • Gold moves 0.53% lower on the week but makes a new high at $1565 on the continuous futures contract on August 26
  • September silver gains 4.51% since last week and closed at over the $18.30 per ounce level
  • Platinum explodes 8.93% higher since as rhodium does even better. October platinum was at a $591.30 per ounce discount to October gold futures, which narrowed since last week
  • Palladium moved 5.82% higher for the week and settles at just under the $1540 per ounce level
  • September copper gains 0.65% on the week
  • October iron ore futures move 3.19% lower on the week
  • The BDI moved 7.51% higher since August 23 and rises to the 2277 level
  • October Rotterdam coal moves 0.81% higher since last week
  • September lumber rises 4.45% since last week
  • October NYMEX crude oil 1.72% higher since August 23 as inventories and the rig count decline despite record production levels
  • November Brent crude oil moved 0.39% higher since the previous report. October Brent rolled to November and was at $59.03 per barrel on Friday as the Brent underperformed WTI crude oil
  • The premium for Brent over WTI in November closes Friday at the $4.14 level down $0.67 from last week
  • October gasoline moves only 0.18% higher while October heating oil futures rise 0.76% over the past week
  • The gasoline crack spread in October was 12.82% lower while the October heating oil crack moved 3.19% to the downside since August 23
  • Natural gas rose 5.79% on October futures closing the week at $2.285 per MMBtu as Hurricane Dorian approaches the Florida coast. The EIA reported an injection of 60 bcf into storage on Wednesday for the week ending on August 23
  • October ethanol moves 2.94% higher on the week
  • November soybeans rose 1.46% since last week
  • December corn edged 0.54% higher on the week
  • CBOT December wheat dropped 3.19% since last week. December KCBT wheat trading at a 65.25 cents discount under December CBOT wheat. The discount remains far from the historical norm but declined over the past week
  • October sugar dropped 2.88% since August 16 to a new low at just over 11 cents per pound
  • December coffee rose 0.83% lower on the week
  • December cocoa edged 0.71% lower since last week
  • December cotton rose 1.07% since August 23 but remains near the 2016 low
  • November FCOJ futures recovered by 5.54%, as the price moved back over the $1 per pound level
  • October live cattle fell 0.48% since last week as the peak season ends this weekend
  • October feeder cattle fall 1.30% higher since August 23
  • October lean hog futures bounce by 7.12% over the past week to over the 63.50 cents per pound level
  • The September dollar index futures contract gains 1.36% on the week as the index rises to a new high above the August 1 98.70 peak
  • September Long-Bond futures trading at 165-12 unchanged for the week. The long bond traded to a new high at 167-18 during the week
  • The Dow Jones Industrial Average closes at 26,403 on Friday, August 30, up 774 points from August 23 after a wild week. The S&P 500 gains 2.78% since last week. The VIX falls 0.84 and was trading at around 19.03 on Friday
  • Bitcoin was trading at $9,573.99 on Friday down $848.18 or 8.14% since August 23
  • Ethereum was trading at $169.05 on Friday, down 13.13% since the last report

 

Price Changes for the week:

DBC closes at $14.83 per share, up two cents per share since August 23  

 Source: Barchart

 

DBC is the Invesco DB Commodity Tracking product which represents a diversified basket of commodities futures contracts, has net assets of $1.57 billion and trades an average daily volume of 1,029,643 shares. The fund summary for DBC states that it holds a diversified group of commodities futures but is weighted towards energy. Total average volume fell over the past week.

 

Have a great holiday weekend!

Any investment involves substantial risks, including, but not limited to, pricing volatility, inadequate liquidity, and the potential complete loss of principal.  This document does not in any way constitute an offer or solicitation of an offer to buy or sell any investment, security, or commodity discussed herein, or any security in any jurisdiction in which such an offer would be unlawful under the securities laws of such jurisdiction.   

                                                         

 

 

 

 

 

 

 

Andy Hecht

Author

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