Commodities And Precious Metals Update (Week Ending May 22, 2020)

Key points

Energy prices were all higher last week, with WTI crude oil prices increasing the most. WTI and Brent crude oil prices (September futures) increased 11.2 % and 8.6%, respectively. Gasoil and heating oil prices (July futures prices) increased 6.0% and 6.8%%, respectively and gasoline prices rose 6.9%. Natural gas prices increased 2.6%.

Grain prices were mostly lower last week with the sole exception of Chicago wheat. Kansas wheat prices fell 1.7% while Chicago wheat prices moved oppositely, gaining 1.7%. Corn prices fell 0.4% and soybean prices decreased 0.6%.

Base metal prices all moved higher. Copper and nickel prices rose 2.4% and 1.2%, respectively and aluminum and nickel prices increased 3.1% and 3.3%, respectively.

Gold prices were slightly lower, falling 0.1% while silver and platinum prices increased 3.7% and 8.7%, respectively.

The Bloomberg Commodity Index reversed course and increased 1.75% last week. The energy and base metals sectors also reversed course and were primarily responsible for the week’s gains in the index.

Total assets in commodity ETPs increased $952.3m last week. Gold ($450.3m), silver ($392.6m), broad commodity ($65.2m) and precious metals (ex-gold and silver) ($43.7m) ETP inflows were primarily responsible for the increase. There were no significant ETP outflows.

Commentary

Up over 3% Monday on positive news regarding Moderna’s development of a coronavirus vaccine, the S&P 500 Index zigzagged the rest of the week finishing very close to Monday’s level.  Initial optimism over Moderna’s progress was partially offset by doubts and questions over the value of the initial results on Tuesday, pushing the S&P 500 Index about 1% lower on the day. Continued easing of restrictions throughout the U.S. with increasing expectations of stronger economic growth moved the S&P 500 Index higher by almost 2% on Wednesday only to see some of those gains reversed on Thursday with the weekly jobless claims report showing initial claims of 2.4 million. The S&P 500 Index closed the week up 3.2% at 2,955.46, the 10-year U.S. Treasury rate rose 1bp to 0.66% and the U.S. dollar (as measured by the DXY Index) gave up last weeks gains, weakening 0.6%.

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