China’s announcement overnight that it intents to target 7.5% GDP growth once again in 2014 has sent the right signals to the commodity markets. China is the world’s largest consumer of raw materials and as such is heavily reliant on the importation of certain non-indigenous commodities.
Zinc was the main beneficiary this morning on the upbeat predictions from China. The metal hit a one year price high earlier reaching $2,143 per metric ton at one point before profit taking lead to a sell off.
Nickel traded as high as $15,310 per metric tone, the highest level in nearly 9 months. Even Copper which had been undergoing a strong technical sell off took a bounce on the back of the Chinese announcement, this recently out of favor industrial metal came off 3 month lows to trade at $7,049 per metric ton, a 1.25% recovery.
Precious metals, like their industrial counterparts have also experienced strong buying this morning. Easing of the Ukrainian tensions provided a pause to the run up in this asset class yesterday. Today however saw a return to business as usual, Gold spot is the main protagonist following a prediction from the CEO of Barrick Gold, a major gold produce, that prices could reach $2,000 per ounce within 2 years. To be fair, there is zero chance that a significant gold miner is going to suggest that the price is going lower. Rounding out the precious metal set, Silver and Platinum are also strongly in demand this morning.
Agricultural and energy commodities are not faring as well as the metals. These were more strongly affected by the Ukrainian situation and as such underwent particularly strong price rises on the back of a threat to disruption of supply. Prices are continuing to ease back toward pre-crises levels but are slower to do so than other assets due to risk of the situation spontaneously re-igniting. Corn and Wheat, two of the Ukraine’s major exports, are both marginally lower in trading today as the residual of the panic buying earlier in the week is removed from the equation. Similarly, Oil & Natural Gas are experiencing selling pressures as fundamentals replace geopolitics as the primary price driver.
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