Etikett: Simona Gambarini

Cyclicals Back in Favour as US Dollar Softens

Cyclicals Back in Favour as US Dollar Softens

ETF Securities Commodity ETP Weekly Cyclicals Back in Favour as US Dollar Softens

Long oil ETPs record the largest inflows in over two months, as current prices are deemed unsustainable.

Copper back in favour as production stops at Grasberg.

Gold ETPs suffer the 4th consecutive week of outflows.

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The correction in the US Dollar following the March FOMC meeting brought some relief to commodity prices last week. Oil and copper were once again favoured by investors, while gold continued to see outflows. Going forward, we expect demand for cyclical commodities to continue to benefit from the stimulus-driven cyclical rebound, while gold is likely to continue to feel the weight of rising interest rates in the US.

Long oil ETPs record the largest inflows in over two months, as current prices are deemed unsustainable. Total inflows into long oil products reached US$146.5mn last week, with WTI accounting for US$127.3mn. The price of WTI fell below US$45/bbl last week, the lowest level in 6 years, as US crude stockpiles soared for a tenth week, while output continued to rise. Meanwhile, the spread between Brent and WTI continue to widen, as US crude oil stocks have increased by over 70 million barrels since the beginning of 2015, putting storage facilities under pressure. We expect WTI and Brent to return to trade at around US$55/bbl and aUS$65/bbl by year end, as the massive decline in drilling activity in the US translates into substantial output cuts.

Copper back in favour as production stops at Grasberg. ETFS Copper (COPA) recorded US$11.7mn of inflows last week, the largest in 15 weeks, after operations at Freeport’s Grasberg mine, the world’s second-largest copper producer, were suspended for 5 days due to a labour dispute. This is not the only production disruption in the copper market since the beginning of the year. Last month, BHP Billiton reported a 60,000 tonnes reduction in copper production from its Olympic Dam mine in Australia due to problems at its mill. With the copper market having been in a deficit for the past 3 years, any unplanned supply outages have the potential to send prices higher.

Gold ETPs suffer the 4th consecutive week of outflows. Despite a partial recovery in price, gold ETPs continued to see outflows last week as investors favored cyclical assets once again. The correction in the US Dollar following the March FOMC meeting last week brought some relief to commodity prices that had been severely hit by the strength in the US Dollar. Although the Federal Reserve is no longer indicating that it will be ‘patient’ in raising interest rates, beyond the bullish jobs data it has relatively little ammunition to pull the trigger on rate hikes. The Fed is likely to raise rates more slowly than the market currently expects, leading to a short-term US Dollar pull-back. Gold is likely to continue to feel the weight of rising interest rates in the US. However, currently the price of gold over-estimates the pace of that tightening, and gold can offer a relatively cheap hedge to some of the tail risks of policy mistakes that may occur as the rise of anti-establishment political parties in Europe threatens to challenge the status quo.

Key events to watch this week. A number of manufacturing PMIs for Japan, China, the US and the Eurozone will be released this week and will help investors assess the strength of those economies. CPI releases for the US and the UK will also be monitored for any indication that higher rates may be warranted.

Video Presentation

Simona Gambarini, Research Analyst at ETF Securities provides an analysis of last week’s performance, flow and trading activity in commodity exchange traded products and a look at the week ahead.

For more information contact

ETF Securities Research team
ETF Securities (UK) Limited
T +44 (0) 207 448 4336
E info@etfsecurities.com

Important Information

General

This communication has been provided by ETF Securities (UK) Limited (”ETFS UK”) which is authorised and regulated by the United Kingdom Financial Conduct Authority.

This is a strictly privileged and confidential communication between ETFS UK and its selected client. This communication contains information addressed only to a specific individual and is not intended for distribution to, or use by, any person other than the named addressee. This communication (i) is provided for informational purposes only, (ii) should not be construed in any manner as any solicitation or offer to buy or sell any securities or any related financial instruments, and (iii) should not be construed in any manner as a public offer of any securities or any related financial instruments. If you are not the named addressee, you should not disseminate, distribute or copy this communication. Please notify the sender immediately if you have mistakenly received this communication. When being made within Italy, this communication is for the exclusive use of the ”qualified investors” and its circulation among the public is prohibited.

This document is not, and under no circumstances is to be construed as, an advertisement or any other step in furtherance of a public offering of shares in the United States or any province or territory thereof. Neither this document nor any copy hereof should be taken, transmitted or distributed (directly or indirectly) into the United States.

This document may contain independent market commentary prepared by ETFS UK based on publicly available information. ETFS UK does not warrant or guarantee the accuracy or correctness of any information contained herein and any opinions related to product or market activity may change. Any third party data providers used to source the information in this communication make no warranties or representation of any kind relating to such data.

Any historical performance included in this document may be based on back testing. Back tested performance is purely hypothetical and is provided in this document solely for informational purposes. Back tested data does not represent actual performance and should not be interpreted as an indication of actual or future performance.

Historical performance is not an indication of or a guide to future performance.

The information contained in this communication is neither an offer for sale nor a solicitation of an offer to buy securities. This communication should not be used as the basis for any investment decision.

ETFS UK is required by the United Kingdom Financial Conduct Authority (”FCA”) to clarify that it is not acting for you in any way in relation to the investment or investment activity to which this communication relates. In particular, ETFS UK will not provide any investment services to you and or advise you on the merits of, or make any recommendation to you in relation to, the terms of any transaction. No representative of ETFS UK is authorised to behave in any way which would lead you to believe otherwise. ETFS UK is not, therefore, responsible for providing you with the protections afforded to its clients and you should seek your own independent legal, investment and tax or other advice as you see fit.

Risk Warnings

Any products referenced in this document are generally aimed at sophisticated, professional and institutional investors. Any decision to invest should be based on the information contained in the prospectus (and any supplements thereto) of the relevant product issue. The price of any securities may go up or down and an investor may not get back the amount invested. Securities may valued in currencies other than those in which there are priced and will be affected by exchange rate movements. Investments in the securities which provide a short and/or leveraged exposure are only suitable for sophisticated, professional and institutional investors who understand leveraged and compounded daily returns and are willing to magnify potential losses by comparison to investments which do not incorporate these strategies. Over periods of greater than one day, investments with a short and/or leveraged exposure do not necessarily provide investors with a return equivalent to a return from the unleveraged long or unleveraged short investments multiplied by the relevant leverage factor. Investors should refer to the section entitled ”Risk Factors” in the relevant prospectus for further details of these and other risks associated with an investment in any securities referenced in this communication.

If you have any questions please contact ETFS UK at +44 20 7448 4330 or info@etfsecurities.com for more information.

Oil: Can Recent Gains be Sustained?

Oil: Can Recent Gains be Sustained?

ETFS Research Note Oil: Can Recent Gains be Sustained?

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Summary

Oil prices have regained ground over the past week but higher prices might hinder the long-term recovery of the oil industry.
US oil rigs have declined by 19% since the end of August 2014, but it is too early to assess the impact on global production.
Further cuts are needed to allow for a sustained recovery in oil prices.

Simona Gambarini discusses the oil industry

Simona Gambarini, Research Analyst at ETF Securities provides an analysis of the current state of the oil industry in the context of US shale oil revolution.

For more information contact:

ETF Securities Research team

ETF Securities (UK) Limited

T +44 (0) 207 448 4336

E info@etfsecurities.com

Important Information

This communication has been provided by ETF Securities (UK) Limited (”ETFS UK”) which is authorised and regulated by the United Kingdom Financial Conduct Authority (the ”FCA”).

When being made within Switzerland, this communication is for the exclusive use by ”Qualified Investors” (within the meaning of Article 10 of Section 3 of the Swiss Collective Investment Schemes Act (”CISA”)) and its circulation among the public is prohibited.

The information contained in this communication is for your general information only and is neither an offer for sale nor a solicitation of an offer to buy securities.

This communication should not be used as the basis for any investment decision. Historical performance is not an indication of future performance and any investments may go down in value.

This document is not, and under no circumstances is to be construed as, an advertisement or any other step in furtherance of a public offering of shares or securities in the United States or any province or territory thereof. Neither this document nor any copy hereof should be taken, transmitted or distributed (directly or indirectly) into the United States.

This communication may contain independent market commentary prepared by ETFS UK based on publicly available information. Although ETFS UK endeavours to ensure the accuracy of the content in this communication, ETFS UK does not warrant or guarantee its accuracy or correctness. Any third party data providers used to source the information in this communication make no warranties or representation of any kind relating to such data. Where ETFS UK has expressed its own opinions related to product or market activity, these views may change. Neither ETFS UK, nor any affiliate, nor any of their respective, officers, directors, partners, or employees accepts any liability whatsoever for any direct or consequential loss arising from any use of this publication or its contents.

ETFS UK is required by the FCA to clarify that it is not acting for you in any way in relation to the investment or investment activity to which this communication relates. In particular, ETFS UK will not provide any investment services to you and or advise you on the merits of, or make any recommendation to you in relation to, the terms of any transaction. No representative of ETFS UK is authorised to behave in any way which would lead you to believe otherwise. ETFS UK is not, therefore, responsible for providing you with the protections afforded to its clients and you should seek your own independent legal, investment and tax or other advice as you see fit.

Gold in Demand as Global Risks Linger

Gold in Demand as Global Risks Linger

Commodity ETP Weekly Gold in Demand as Global Risks Linger

Highlights

Global risks drive US$435mn of inflows into long gold and oil ETPs.
Arabica coffee remains in focus on low crop expectations.
Price correction prompts US$6.3mn of inflows into ETFS Copper (COPA)

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Gold ETPs saw the largest inflows since August 2012 last week, as lingering global risks lifted demand for safe havens. Fears of a further slump in the euro following the ECB quantitative easing announcement last week, and Greece once again threatening the Eurozone’s unity alongside continued geopolitical risks, are likely to continue to buoy gold prices and lift demand for alternative stores of value.

Global risks drive US$435mn of inflows into long gold and oil ETPs. Although the announcement of quantitative easing (QE) by the European Central Bank (ECB) was widely anticipated, the overall size was larger than expected. At EUR60bn a month until September 2016, the ECB will purchase more than a EUR1trn over the course of the programme. The ECB clearly wants the Euro area to move out of a deflationary mind-set. Fear of a further slump in the Euro as the ECB’s looks to boost its balance sheet buoyed the gold price and prompted US$294mn of inflows into our long gold ETPs. Safe havens are likely to remain in demand this week after the Syriza party won the Greek election yesterday, raising prospects that the country will seek to renegotiate the terms of its international bailout. At the same time, oil prices trended higher on Friday as news of Saudi King Abdullah’s death added to uncertainty in energy markets. While prices might remain weak for some time, inflows into long oil ETPs have totalled over US$572mn since the beginning of the year, showing investors are becoming increasingly confident in a price rebound.

Arabica coffee remains in focus on low crop expectations. Long coffee ETPs saw US$4mn of inflows last week as CONAB, the Brazilian forecasting authority, revised down its forecasts for the 2015/16 crop. Brazil is the biggest producer of Arabica coffee with 45% of global production. The development of the coffee trees in the country has been disappointing so far following extreme drought conditions last year. Although rainfall in November had eased the situation somewhat, since then the weather has turned dry again. This could result in a substantially lower crop this year and could prompt a price rally.

Price correction prompts US$6.3mn of inflows into ETFS Copper (COPA). Strong back-to-back weekly inflows into long copper ETPs highlights that investors deem the recent price slump excessive. China’s latest statistics showed that the country grew more than expected in 2014, at 7.4%, easing fears of a hard landing. Although China is turning its focus from construction and export dependent manufacturing to domestic consumption, demand for copper has remained strong in 2014, with imports rising for the 5th consecutive month in November. While low energy prices have dragged down metal prices by reducing their cost of production, we think negative sentiment, rather than weak fundamentals, is weighing on the copper price at the moment.

Key events to watch this week. This week Europe will remain in focus, as the new Greek government seeks to renegotiate the terms of its bailout that is set to expire at the end of February. After the BOC and the ECB surprised markets by cutting rates and announcing a full-blown QE programme respectively, the FOMC meeting on Wednesday will be closely monitored by investors for any signs of a delay in tightening by the Fed. Gold would likely benefit from the Fed highlighting any potential spill-over effect on the US economy from weak oil prices and global risks.

Video Presentation

 

Simona Gambarini, Research Analyst at ETF Securities provides an analysis of last week’s performance, flow and trading activity in commodity exchange traded products and a look at the week ahead.

For more information contact

ETF Securities Research team
ETF Securities (UK) Limited
T +44 (0) 207 448 4336
E info@etfsecurities.com

 

Important Information

General

This communication has been provided by ETF Securities (UK) Limited (”ETFS UK”) which is authorised and regulated by the United Kingdom Financial Conduct Authority.

This is a strictly privileged and confidential communication between ETFS UK and its selected client. This communication contains information addressed only to a specific individual and is not intended for distribution to, or use by, any person other than the named addressee. This communication (i) is provided for informational purposes only, (ii) should not be construed in any manner as any solicitation or offer to buy or sell any securities or any related financial instruments, and (iii) should not be construed in any manner as a public offer of any securities or any related financial instruments. If you are not the named addressee, you should not disseminate, distribute or copy this communication. Please notify the sender immediately if you have mistakenly received this communication. When being made within Italy, this communication is for the exclusive use of the ”qualified investors” and its circulation among the public is prohibited.

This document is not, and under no circumstances is to be construed as, an advertisement or any other step in furtherance of a public offering of shares in the United States or any province or territory thereof. Neither this document nor any copy hereof should be taken, transmitted or distributed (directly or indirectly) into the United States.

This document may contain independent market commentary prepared by ETFS UK based on publicly available information. ETFS UK does not warrant or guarantee the accuracy or correctness of any information contained herein and any opinions related to product or market activity may change. Any third party data providers used to source the information in this communication make no warranties or representation of any kind relating to such data.

Any historical performance included in this document may be based on back testing. Back tested performance is purely hypothetical and is provided in this document solely for informational purposes. Back tested data does not represent actual performance and should not be interpreted as an indication of actual or future performance.

Historical performance is not an indication of or a guide to future performance.

The information contained in this communication is neither an offer for sale nor a solicitation of an offer to buy securities. This communication should not be used as the basis for any investment decision.

ETFS UK is required by the United Kingdom Financial Conduct Authority (”FCA”) to clarify that it is not acting for you in any way in relation to the investment or investment activity to which this communication relates. In particular, ETFS UK will not provide any investment services to you and or advise you on the merits of, or make any recommendation to you in relation to, the terms of any transaction. No representative of ETFS UK is authorised to behave in any way which would lead you to believe otherwise. ETFS UK is not, therefore, responsible for providing you with the protections afforded to its clients and you should seek your own independent legal, investment and tax or other advice as you see fit.

 

Risk Warnings

Any products referenced in this document are generally aimed at sophisticated, professional and institutional investors. Any decision to invest should be based on the information contained in the prospectus (and any supplements thereto) of the relevant product issue. The price of any securities may go up or down and an investor may not get back the amount invested. Securities may valued in currencies other than those in which there are priced and will be affected by exchange rate movements. Investments in the securities which provide a short and/or leveraged exposure are only suitable for sophisticated, professional and institutional investors who understand leveraged and compounded daily returns and are willing to magnify potential losses by comparison to investments which do not incorporate these strategies. Over periods of greater than one day, investments with a short and/or leveraged exposure do not necessarily provide investors with a return equivalent to a return from the unleveraged long or unleveraged short investments multiplied by the relevant leverage factor. Investors should refer to the section entitled ”Risk Factors” in the relevant prospectus for further details of these and other risks associated with an investment in any securities referenced in this communication.

If you have any questions please contact ETFS UK at +44 20 7448 4330 or info@etfsecurities.com for more information.

Oil remains in focus on falling US inventories

Oil remains in focus on falling US inventories

Commodity ETP Weekly Oil remains in focus on falling US inventories

Highlights

Investors favour WTI over Brent as US inventories unexpectedly drop.

Gold and silver ETPs suffer US$77mn of outflows on profit taking.

Natural gas price correction drive inflows to natural gas ETPs to 34-mth highs as winter season approaches.

Profit taking prompts 28-mth high outflows from wheat ETPs.

ETFS Aluminium (ALUM) outflows hit 9-week high on price weakness.

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Investors are becoming increasingly optimistic about oil outlook, with a fall in US stockpiles prompting the 10th consecutive weekly inflow into WTI ETPs. While prices are unlikely to recover sharply in the short-term unless output falls, the ongoing US economic recovery is likely to support demand for distillates.

Investors favour WTI over Brent as US inventories unexpectedly drop. While long Brent ETPs suffered US$82mn of outflows last week, long WTI crude ETPs recorded US$46mn of inflows. Both benchmarks’ prices dropped below US$70/bbl after OPEC’s decision not to cut production for the time being. While the IEA expects 82% of crude oil and condensates production from the United States is still profitable at a price of US$60/bbl or lower, if prices remain persistently low production will likely be reduced by higher cost producers. Although price weakness is likely to continue through the first half of 2015, continued growth from the US and China, combined with a reduction in oil supply, will eventually bring the oil market back to balance in our view with prices returning to trade around the US$90/bbl level.

Gold and silver ETPs suffer US$77mn of outflows on profit taking. Gold has risen almost 6% from the lows experienced after the Swiss gold referendum last week, while silver saw gains for over 15% from its nadir of US$14.08oz in 2014. We believe silver will continue to outperform gold in 2015, as the recovery in China and the US gains momentum, prompting a pick-up in industrial demand for silver.

Natural gas price correction drive inflows to natural gas ETPs to 34-mth highs as winter season approaches. Henry Hub natural gas prices fell by over 16% last week on mild weather, prompting US$30mn of inflows into long and leveraged natural gas ETPs. We expect prices to remain pressured in the short term by both weather forecasts of above average temperatures and abundant supply. However, the gathering momentum of the US economy and increased usage of natural gas in industry and electricity generation will create a supportive price environment in 2015.

Profit taking prompts 28-mth high outflows from wheat ETPs. The wheat price jumped 6.7% on unusually cold weather in the US in recent weeks, as frost might pose a threat to the newly seeded winter crop. Concerns over faltering Russian exports also contributed to buoy wheat prices last week. Russia announced it will consider introducing a floating tariff on grain exports to protect domestic supply should cold weather drastically reduce production. Outflows from long and leveraged wheat ETPs totalled US$20.3mn.

ETFS Aluminium (ALUM) outflows hit 9-week high on price weakness. Aluminium price hit a 5-year low last week, prompting US$52.8mn of outflows despite recent figures from the World Bureau of Metal Statistics showing a deficit in the global aluminium market in the first 9 months of the year. Overproduction in China is likely to continue to weigh on the aluminium price in the medium term. However, Norsk Hydro, one of aluminium’s biggest producers, expects prices to recover in 2015 on the back of tighter supply and strong demand from the automotive sector. At the same time, ETFS Copper (COPA) recorded the largest inflows since August, totalling US$13.4mn, on expected production cuts. Codelco, the world’s largest copper miner, recently announced it will cut production by 5% in 2015 in response to falling prices.

Key events to watch this week. This week will be dominated by China’s economic data, with aggregate financing, retail sales and industrial production all due to be released. China’s stock market surged last week as stimulus from the PBoC and the government is starting to produce its effects on the real economy.

Video Presentation

 

Simona Gambarini, Research Analyst at ETF Securities provides an analysis of last week’s performance, flow and trading activity in commodity exchange traded products and a look at the week ahead.

For more information contact

ETF Securities Research team
ETF Securities (UK) Limited
T +44 (0) 207 448 4336
E info@etfsecurities.com

 

Important Information

General

This communication has been provided by ETF Securities (UK) Limited (”ETFS UK”) which is authorised and regulated by the United Kingdom Financial Conduct Authority.

This is a strictly privileged and confidential communication between ETFS UK and its selected client. This communication contains information addressed only to a specific individual and is not intended for distribution to, or use by, any person other than the named addressee. This communication (i) is provided for informational purposes only, (ii) should not be construed in any manner as any solicitation or offer to buy or sell any securities or any related financial instruments, and (iii) should not be construed in any manner as a public offer of any securities or any related financial instruments. If you are not the named addressee, you should not disseminate, distribute or copy this communication. Please notify the sender immediately if you have mistakenly received this communication. When being made within Italy, this communication is for the exclusive use of the ”qualified investors” and its circulation among the public is prohibited.

This document is not, and under no circumstances is to be construed as, an advertisement or any other step in furtherance of a public offering of shares in the United States or any province or territory thereof. Neither this document nor any copy hereof should be taken, transmitted or distributed (directly or indirectly) into the United States.

This document may contain independent market commentary prepared by ETFS UK based on publicly available information. ETFS UK does not warrant or guarantee the accuracy or correctness of any information contained herein and any opinions related to product or market activity may change. Any third party data providers used to source the information in this communication make no warranties or representation of any kind relating to such data.

Any historical performance included in this document may be based on back testing. Back tested performance is purely hypothetical and is provided in this document solely for informational purposes. Back tested data does not represent actual performance and should not be interpreted as an indication of actual or future performance.

Historical performance is not an indication of or a guide to future performance.

The information contained in this communication is neither an offer for sale nor a solicitation of an offer to buy securities. This communication should not be used as the basis for any investment decision.

ETFS UK is required by the United Kingdom Financial Conduct Authority (”FCA”) to clarify that it is not acting for you in any way in relation to the investment or investment activity to which this communication relates. In particular, ETFS UK will not provide any investment services to you and or advise you on the merits of, or make any recommendation to you in relation to, the terms of any transaction. No representative of ETFS UK is authorised to behave in any way which would lead you to believe otherwise. ETFS UK is not, therefore, responsible for providing you with the protections afforded to its clients and you should seek your own independent legal, investment and tax or other advice as you see fit.

 

Risk Warnings

Any products referenced in this document are generally aimed at sophisticated, professional and institutional investors. Any decision to invest should be based on the information contained in the prospectus (and any supplements thereto) of the relevant product issue. The price of any securities may go up or down and an investor may not get back the amount invested. Securities may valued in currencies other than those in which there are priced and will be affected by exchange rate movements. Investments in the securities which provide a short and/or leveraged exposure are only suitable for sophisticated, professional and institutional investors who understand leveraged and compounded daily returns and are willing to magnify potential losses by comparison to investments which do not incorporate these strategies. Over periods of greater than one day, investments with a short and/or leveraged exposure do not necessarily provide investors with a return equivalent to a return from the unleveraged long or unleveraged short investments multiplied by the relevant leverage factor. Investors should refer to the section entitled ”Risk Factors” in the relevant prospectus for further details of these and other risks associated with an investment in any securities referenced in this communication.

If you have any questions please contact ETFS UK at +44 20 7448 4330 or info@etfsecurities.com for more information.

Oil ETPs in Focus Ahead of OPEC Meeting

Oil ETPs in Focus Ahead of OPEC Meeting

Oil ETPs in Focus Ahead of OPEC Meeting

Highlights

Both long and short WTI crude see inflows as investors position themselves ahead of the OPEC meeting.

Mild winter expectations drive US$11mn out of long natural gas ETPs.

Bargain hunters prompt largest inflows since March for ETFS Cotton (COTN) as the price falls to a 5-year low.

Gold ETPs remain under pressure as price falls below US$1,150oz.

 

Download the complete report (.pdf)

 

 

While gold and natural gas saw outflows last week, oil continued to attract investors’ interest ahead of the OPEC meeting on November 27. Investors appear to be split in their expectations for the meeting, with both long and short oil ETPs receiving inflows. Bargain hunting is clearly becoming a recurrent theme with the correction in commodity prices likely to trigger a supply response next year.

Both long and short WTI crude see inflows as investors position themselves ahead of the OPEC meeting. The price of WTI crude is now trading close to US$74/bbl, the lowest level in 4 years. While OPEC has historically played a fundamental role in keeping oil prices well supported, prices were under pressure as OPEC members sold oil at a discount in order to increase market share in Asia and the US, despite the Saudi oil ministers’ assertions that a price war was not occurring. With the majority of OPEC countries estimated to require oil prices of above US$90/bbl to balance government budgets, it appear only a matter of time before OPEC announce output reductions and that could happen as early as November 27, when OPEC holds its next meeting.

Mild winter expectations drive US$11mn out of long natural gas ETPs. The National Oceanic and Atmospheric Administration (NOAA) predicts average to above average temperatures for the US 2014-15 winter season, with warmer weather in the West and in New England, and cooler temperatures in parts of the south-central and south-eastern regions. Higher levels of production combined with lower levels of consumption should result in a significantly lower drawdown of natural gas inventories this winter, in turn putting downward pressure on prices. The EIA expects Henry Hub spot price to average $4.00/MMBtu this winter compared with $4.52/MMBtu last winter.

Bargain hunters prompt largest inflows since March for ETFS Cotton (COTN) as the price falls to a 5-year low. Inflows amounted to US$5.7mn last week as prices dropped following the USDA raising its projections for cotton inventories in the US. Excess production and lower demand from China have increased expectations for inventories for the US, The world’s largest exporter. Abundant stockpiles have weighed on cotton prices this year, as production is forecasted to outpace consumption for the 5th straight year. With China offloading some of the inventories accumulated in recent years by way of its subsidy programme, we expect the outlook for cotton to remain bearish.

Gold ETPs remain under pressure as price falls below US$1,150oz. Outflows from long gold ETPs continued last week as prospects for global growth improved and inflationary risk remains low. The release of the World Gold Council’s Gold demand trends for Q3 last week showed feeble gold demand, with jewellery and coin/bar demand softening. Demand from India could also weaken, as the government might reintroduce some of the curbs on gold imports that were eased in May. While in the short term those discussions might prompt consumers to buy gold ahead of the restrictions being introduced, the higher premiums that could follow a potential tightening of restrictions will likely dampen demand going forward, reducing some of the support for the gold price in 2015.

Key events to watch this week. Investors will be closely monitoring the monetary policy releases from the US Fed, the Bank of England and the Bank of Japan to gauge the policymakers’ outlook for growth and how this will affect demand for commodities going into 2015. However, the results for the upcoming OPEC meeting and the Swiss gold referendum will be key for the precious metals and energy sectors performance at the back end of 2014.

Video Presentation

 

Simona Gambarini, Research Analyst at ETF Securities provides an analysis of last week’s performance, flow and trading activity in commodity exchange traded products and a look at the week ahead.

For more information contact

ETF Securities Research team
ETF Securities (UK) Limited
T +44 (0) 207 448 4336
E info@etfsecurities.com

 

Important Information

General

This communication has been provided by ETF Securities (UK) Limited (”ETFS UK”) which is authorised and regulated by the United Kingdom Financial Conduct Authority.

This is a strictly privileged and confidential communication between ETFS UK and its selected client. This communication contains information addressed only to a specific individual and is not intended for distribution to, or use by, any person other than the named addressee. This communication (i) is provided for informational purposes only, (ii) should not be construed in any manner as any solicitation or offer to buy or sell any securities or any related financial instruments, and (iii) should not be construed in any manner as a public offer of any securities or any related financial instruments. If you are not the named addressee, you should not disseminate, distribute or copy this communication. Please notify the sender immediately if you have mistakenly received this communication. When being made within Italy, this communication is for the exclusive use of the ”qualified investors” and its circulation among the public is prohibited.

This document is not, and under no circumstances is to be construed as, an advertisement or any other step in furtherance of a public offering of shares in the United States or any province or territory thereof. Neither this document nor any copy hereof should be taken, transmitted or distributed (directly or indirectly) into the United States.

This document may contain independent market commentary prepared by ETFS UK based on publicly available information. ETFS UK does not warrant or guarantee the accuracy or correctness of any information contained herein and any opinions related to product or market activity may change. Any third party data providers used to source the information in this communication make no warranties or representation of any kind relating to such data.

Any historical performance included in this document may be based on back testing. Back tested performance is purely hypothetical and is provided in this document solely for informational purposes. Back tested data does not represent actual performance and should not be interpreted as an indication of actual or future performance.

Historical performance is not an indication of or a guide to future performance.

The information contained in this communication is neither an offer for sale nor a solicitation of an offer to buy securities. This communication should not be used as the basis for any investment decision.

ETFS UK is required by the United Kingdom Financial Conduct Authority (”FCA”) to clarify that it is not acting for you in any way in relation to the investment or investment activity to which this communication relates. In particular, ETFS UK will not provide any investment services to you and or advise you on the merits of, or make any recommendation to you in relation to, the terms of any transaction. No representative of ETFS UK is authorised to behave in any way which would lead you to believe otherwise. ETFS UK is not, therefore, responsible for providing you with the protections afforded to its clients and you should seek your own independent legal, investment and tax or other advice as you see fit.

 

Risk Warnings

Any products referenced in this document are generally aimed at sophisticated, professional and institutional investors. Any decision to invest should be based on the information contained in the prospectus (and any supplements thereto) of the relevant product issue. The price of any securities may go up or down and an investor may not get back the amount invested. Securities may valued in currencies other than those in which there are priced and will be affected by exchange rate movements. Investments in the securities which provide a short and/or leveraged exposure are only suitable for sophisticated, professional and institutional investors who understand leveraged and compounded daily returns and are willing to magnify potential losses by comparison to investments which do not incorporate these strategies. Over periods of greater than one day, investments with a short and/or leveraged exposure do not necessarily provide investors with a return equivalent to a return from the unleveraged long or unleveraged short investments multiplied by the relevant leverage factor. Investors should refer to the section entitled ”Risk Factors” in the relevant prospectus for further details of these and other risks associated with an investment in any securities referenced in this communication.

If you have any questions please contact ETFS UK at +44 20 7448 4330 or info@etfsecurities.com for more information.