2. PRECIOUS METALS
During the week of August 29- September 1, gold declined from the August 23 high close
to $1,370 to a low of $1,308 on the perception that the Federal Reserve would be raising
rates later this month. For September 2, the day of the weaker job report, it began to rise
again based on the new thinking that the Federal Reserve is not going to do anything this
month.
On Monday August 29, gold futures touched the lowest in more than a month after
comments from central bankers raised speculation of an upcoming interest rate hike in
September. Higher rates make bullion less competitive against interest-bearing assets.
Gold pared losses late in the trading session as the U.S. dollar relinquished most of its
gains this afternoon. Gold futures for December delivery added 0.1 percent to settle at
$1,327.10 an ounce on the Comex in New York. Earlier, the metal touched $1,317.20, the
lowest since July 20. Aggregate trading was 36 percent below the 100-day average for
this time. Holdings in bullion-backed exchange traded funds lost 1.4 metric tons to
2,032.25 tons. Silver futures for December delivery gained 0.6 percent to $18.859 an
ounce. On the New York Mercantile Exchange, platinum and palladium rose.
On August 30, gold futures continued to decline, making this August the first August in
seven years in which gold fared poorly. Futures dropped 3 percent this month as the
Federal Reserve moved towards a rate hike and bullion purchases for exchange-traded
funds slowed. Gold futures for December delivery slid 0.8 percent to settle at $1,316.50
an ounce. The BI Global Senior Gold Valuation Peers index dropped 3.9 percent, with
Barrick Gold Corp. and Newmont Mining Corp. among the biggest decliners. Holdings in
bullion-backed exchange traded funds added 0.4 metric ton to 2,032.6 tons. Silver
futures for December delivery dropped 1 percent to $18.673 an ounce. On the New York
Mercantile Exchange, platinum and palladium fell.
On August 31, gold wrapped up its worst August in a long time, with gold’s first August
decline since 2009. The demand for bullion through exchange-traded products slowed as
Federal Reserve officials signaled they may be moving closer to a raise in interest rates
for the year. Purchases of gold-backed ETPs fell to the lowest since April, when there
were outflows, as the prospect of tighter monetary policy curbed the appeal of the metal
because it doesn’t pay interest.
On September 1, gold volatility dropped to the lowest this year as investors waited for
the release of the U.S. jobs report, which would influence the timing of any interest-rate
increases. The metal’s 60-day volatility fell to the lowest since December ahead of the
August data. Gold’s 24 percent gain in 2016 had been dented after Federal Reserve
officials indicated a likelihood of tightening before the end of the year. Gold futures for
December delivery increased 0.4 percent to settle at $1,317.10 an ounce, rising for the
first time in three days. Holdings in bullion-backed exchange traded funds fell 11.3 metric
tons to 2,021.3 tons on Wednesday, the biggest decline since August 12. Silver futures
3. for December delivery gained 1.3 percent to $18.943 an ounce, the biggest gain in three
weeks. The BI Senior Gold Valuation Peers index rose 2.4 percent, the first increase in 10
sessions. Harmony Gold Mining Co. and Barrick Gold Corp. paced gains. Platinum and
palladium declined on the New York Mercantile Exchange.
On September 2, gold futures gained, reducing a weekly decline, after U.S. employment
data missed estimates, boosting the metal’s appeal as a haven. Gold is up 25 percent this
year as uncertainty in U.S. growth pushed the Federal Reserve to consider holding off
raising interest rates. Higher rates reduce the appeal of gold, which doesn’t pay interest
or offer returns like assets such as bonds or equities. Before the release of the jobs
report, the metal was little changed as it headed for a second straight weekly decline.
Gold futures for December delivery gained 0.7 percent to settle at $1,326.70 an ounce,
erasing a weekly loss. Silver for December delivery rose 2.2 percent to $19.366 an ounce.
On the New York Mercantile Exchange, platinum and palladium also gained. Holdings in
bullion-backed exchange traded funds fell 4.7 metric tons to 2,016.6 tons on Thursday,
the lowest in a month.
On Tuesday September 6, platinum futures had the biggest gain in more than four
months as a rise in South Africa’s rand spurred speculation that production costs will
increase. The nation accounts for 73 percent of world platinum production. Platinum has
risen about 23 percent this year, trailing returns in silver and gold. Platinum futures for
October delivery climbed 3.8 percent to settle at $1,102.70 an ounce on the New York
Mercantile Exchange, marking the biggest advance for a most-active contract since April
19. Aggregate trading was 82 percent above the 100-day average for this time. Platinum
also benefitted from the tailwind provided by gold after the dimming prospects of a rate
hike. Gold futures for December delivery advanced 2.1 percent to $1,354 an ounce, a
third straight gain, the longest rally since August 2. Silver futures also rallied, while
palladium climbed.
On September 7, gold came back on investors’ radars. Holdings in exchange-traded funds
backed by the metal climbed by 13.8 metric tons in the first two days of the week,
topping the 13.7 tons added in all of August. Aggregate open interest in futures rose to
the highest in six weeks. Gold has rallied 27 percent this year as the Fed held off on
raising rates and the U.K. vote to exit the European Union boosted demand for haven
assets. Gold futures for December delivery touched $1,357.60 an ounce, the highest for a
most-active contract since August 19, but prices slipped 0.4 percent to settle at
$1,349.20. Silver futures slipped as well, while platinum and palladium declined on the
New York Mercantile Exchange.
On September 8, ECB President Mario Draghi put the gold market on hold. Bullion swung
between gains and losses as investors assessed the outlook for economic stimulus after
the European Central Bank president said officials will look at redesigning the ECB’s
quantitative-easing program. The review was ordered to ensure the program doesn’t run
out of bonds to buy. Gold futures closed lower. Gold rallied 27 percent this year as the
4. Fed held off raising borrowing costs and central banks including ECB boosted stimulus to
support growth. While signs of cracks in the U.S. economy pushed gold futures to a two-
week high on Wednesday, uncertainty on the path of easing in the euro area helped sap
momentum. Gold futures for December delivery fell 0.6 percent to settle at $1,341.60 an
ounce. Aggregate trading was 16 percent below the 100-day average for this time. Prices
touched $1,357.60 on Wednesday, the highest since August 19. Holdings in bullion-
backed exchange-traded funds fell 0.9 metric ton to 2,030.1 tons on Wednesday. Silver
futures settled lower, while platinum and palladium futures slipped on the New York
Mercantile Exchange.
On September 9, gold continued its slide as fears of a rate hike in September took hold
when the previously dovish Boston Fed President suggested that one could be on the
way sooner rather than later. This resulted in additional selling as December futures
ended with their second straight decline at $1,334.50 an ounce.
Shelly Bashkirov
5. INDUSTRIAL METALS
After declining steadily since July from $2.25 a pound, copper appeared to have found a
near-term bottom around $2.07 a pound and moved up during the second week of
September 6 to September 9. Comex trading was closed on September 5 for the Labor
Day holiday.
On Monday, August 29, copper dropped to the lowest in two months on ample supply, in
addition to China woes. Copper futures for December delivery fell 0.3 percent to settle at
$2.079 a pound on the Comex in New York, after touching $2.076, the lowest since June
24. The metal slid as much 0.6 percent on the Shanghai Futures Exchange before closing
little changed at $5,455 a metric ton. It dropped 2.6 percent the previous week, the most
since May 13. Copper has wiped out all of its gains this year, lagging behind other metals,
as supply continued to outstrip demand.
On August 30, mining companies slumped as the rally appeared to be running out of
steam. Copper for delivery in three months dropped 0.2 percent to settle at $2.09 a
pound on the London Metal Exchange, falling for a seventh straight session, the longest
stretch since April. Speculation that the U.S. central bank will increase rates this year has
surged over the past two weeks, halting a global equities rally and lifting the dollar. Policy
makers including Fed Chair Janet Yellen said the case for a move is getting stronger.
Gains in the dollar have curbed demand for commodities priced in greenbacks as an
alternative investment. Copper for delivery slid 0.1 percent to $2.0765 a pound.
Aluminum, Zinc and tin fell while nickel and lead gained.
On August 31, copper rose for the first time in eight days after production at a mine in
Chile was halted and a potential strike at another operation raised the prospect of supply
disruptions in the biggest copper producing nation. The red metal for delivery in three
months rose 0.2 percent to settle at $4,617 a metric ton on the London Metal Exchange.
Lead and tin also advanced while aluminum and nickel declined. Zinc was little changed.
On September 1, zinc, lead and tin climbed to the highest in more than a year after
China’s official factory gauge unexpectedly rose last month, signaling improved demand
from the world’s top metal user. Zinc for delivery in three months rose 1.2 percent to
settle at $2,338 metric ton. The metal for intermediate delivery settled on August 31 at
an $8.75 a ton premium to the benchmark contract, the widest backwardation since May
2015. Lead and tin gained more than one percent and touched highs not seen in the past
year. On-warrant tin stockpiles dropped 5.2 percent to 2,750 tons, the lowest in 11 years.
Copper and nickel also gained while aluminum was little changed. Copper futures for
delivery slid 0.1 percent to $2.0755 a pound.
On September 2, nickel capped the biggest two-day gain in more than a month as
stockpiles of the metal dropped to the lowest in almost two years. Global inventories of
the metal used in stainless steel declined for a third straight day to 368,430 metric tons,
6. the lowest since October 2014. Nickel prices have risen 14 percent this year as the threat
of supply disruptions in the Philippines, the world’s biggest producer of the mined metal,
boosted concerns of a shortfall. Nickel for delivery in three months rose 1.5 percent to
settle at $10,060 percent a ton, the biggest two-day gain since July 28. Copper slipped
0.1 percent in London. Zinc rose 1.1 percent to $2,364 a ton after touching the highest
since May 2015. Copper futures for December delivery gained 0.1 percent to $2.078 a
pound.
On September 6, zinc dropped as investors took a break from year’s best commodity
gainer. Zinc has rallied 44 percent this year on expectations of a supply shortage after
mine closures from Australia to Ireland. Zinc for delivery in three months fell 1.7 percent
to settle at $2,321 a metric ton on the London Metal Exchange. Aluminum rose 0.6
percent after touching the lowest since mid-June, while copper slipped 0.1 percent.
Copper futures for December delivery gained 0.5 percent to $2.089 a pound. Nickel and
tin advanced, while lead slipped.
On September 7, copper had the biggest advance in almost three weeks as a mine strike
in Chile, the largest producer, helped ease concerns that global supplies of the metal will
exceed demand. Copper for delivery in three months gained 0.6 percent $4,650 a metric
ton on the London Metal Exchange, the biggest gain since August 18. Aluminum, nickel,
zinc and tin also gained, while lead declined. Copper futures for December delivery
advanced to $2.09.75 a pound.
On September 8, copper held above a two-month low since the end of August amid a
mixed outlook for demand. China imports of the metal reached a one-year low in August.
Copper for delivery in three months added 0.3 percent to settle at $4,664 a metric ton on
the London Metal Exchange. Prices were now down 0.9 percent this year, the worst
performance among the bourse’s six main metals. Bourse data showed that stockpiles
fell for the first time in 13 days. Copper futures rose to $2.10 a pound, nickel rallied as
much as 1.6 percent to a two-week high of $10,370 a ton on the London Metal Exchange.
Aluminum and Zinc fell while lead and tin advanced.
On September 9, copper futures pulled back a little to end at $2.0925 a pound as the
dollar strengthened and all commodities sold off on fears that the Fed might raise
interest rates later this month. But for the holiday-shortened week, it did rise a bit and
seems to have found near-term support at $2.07 a pound.
Lydie Nonda
7. ENERGY COMPLEX
For the past two weeks, crude oil has been bouncing around in a fairly narrow range
centered around the mid- $40 a barrel level. Price action has been a function of
perception about OPEC output cutbacks or not.
On August 29, oil declined amid doubts that producers will agree on a deal to stabilize
the market when global suppliers meet later this month for informal talks. Futures
decreased 1.4 percent in New York. Iran’s plan to continue boosting crude output until it
regains its pre-sanctions OPEC market share has dimmed prospects of collective action.
WTI for October delivery dropped by .66 cents to settle at $46.98 a barrel on the New
York Mercantile Exchange. Brent for October settlement fell by .66 cents, or 1.3 percent,
to $49.26 a barrel on the ICE Futures Europe Exchange. The global benchmark crude
closed at a $2.28 premium to WTI. The U.S. currency rose after Federal Reserve officials
spurred bets that the U.S. central bank will increase interest rates as soon as this month.
This caused the dollar to advance against the euro.
On August 30, oil dropped to a two-week low before a government report that was
projected to show that U.S. crude stockpiles increased. The dollar rose to the highest in
more than three weeks. WTI for October delivery declined by .63 cents, or 1.3 percent, to
settle at $46.35 a barrel in New York. Futures were little changed from the settlement
after the industry-funded American Petroleum Institute was said to report U.S. crude
supplies rose 942,000 barrels the week prior. WTI traded at $46.29 in New York. Brent
for October settlement decreased by .89 cents, or 1.8 percent, to $48.37 a barrel in
London. The global benchmark crude ended the session at a $2.02 premium to WTI.
On August 31, crude inventories climbed 2.28 million barrels, according to the EIA. A 1.3
million-barrel gain was projected. Imports rose to the highest in almost four years as
output slipped. Oil capped a monthly advance as OPEC’s planned talks fan speculation it
could reach an accord on output. WTI for October delivery dropped $1.65, or 3.6
percent, to $44.70 a barrel in New York, the biggest decline since August 1. Total volume
traded was 7.8 percent below the 100-day average. Brent for October settlement slipped
$1.33, or 2.8 percent, to $47.04 a barrel on the Ice Futures Europe Exchange, and closed
at a $2.34 premium to WTI. U.S. crude supplies expanded to 525.9 million in the week
ended August 26. Inventories reached 543.4 million barrels in the week ended April 29.
These stockpiles are at their highest seasonal level in more than 20 years. Crude imports
increased to 8.92 million the prior week.
On September 1, oil tumbled after U.S. government data showed crude supplies at the
highest seasonal level in more than 20 years. Supplies rose by 2.28 million barrels the
prior week, according to the EIA. WTI for October delivery declined by $1.54 to settle at
$43.16 a barrel on the New York Mercantile Exchange. Total volume traded was 9.5
percent above the 100-day average. Brent for November settlement slid $1.44, or 3.1
8. percent, to $45.45 a barrel on the ICE Futures Europe exchange. October Brent futures
fell 2.8 percent to expire at $47.04 on Wednesday. U.S. crude stockpiles rose to 525.9
million barrels. Imports increased 275,000 barrels a day to 8.92 million while production
slipped 60,000 barrels a day to 8.49 million. Supplies at Cushing, Oklahoma, fell to 63.9
million barrels.
On September 2, oil snapped four days of declines as Vladimir Putin said he would like
Russia and OPEC to reach an oil output freeze apart from Iran. Futures gained 3 percent
in New York. OPEC’s crude output rose to a record in August, climbing by 120,000 barrels
a day. Payrolls in the U.S. rose less than expected, according to government data. Oil
climbed 7.5 percent in August amid speculation that talks in Algiers at the end of
September may lead to an agreement to stabilize the oil market. WTI for October
delivery rose by $1.28 to settle at $44.44 a barrel on the New York Mercantile Exchange.
WTI posted a 6.7 percent decline. Brent for November settlement climbed $1.38, or 3
percent, at $46.83 a barrel on the ICE Futures Europe exchange. The global benchmark
crude traded at a $1.79 premium to November WTI.
Payrolls climbed by 151,000 in August in the U.S. following a 275,000 gain in July that was
larger than previously estimated, a Labor Department report showed. The median
forecast in had called for 180,000. The dollar initially weakened following the report.
OPEC’s crude production rose to a record in August as increased output from Gulf
members made up for persisting losses in Nigeria and Libya. Supplies climbed to average
33.69 million a day.
On September 6, an international agreement to cap crude-oil output in a way that would
restrict actual supply and support prices was no nearer after the two largest producers
pledged to cooperate. Brent oil fell after a pledge by Russia and Saudi Arabia to
cooperate to stabilize the market failed to include any specific measures to support
prices. Asa result, futures dropped 0.8 percent in London. Brent for November
settlement fell by .37 cents to $47.26 a barrel on the ICE Futures Europe exchange in
New York. Total volume traded was 34 percent below the 100-day average. WTI for
October delivery rose by .39 cents, or 0.9 percent, to close at $44.83 a barrel on the New
York Mercantile Exchange. WTI for November delivery closed at a $1.80 discount to Brent
for the same month. A gauge of the dollar tumbled after a report showed America’s
service industries expanded in August at the weakest pace in six years.
On September 7, WTI climbed to the highest since August 30 ahead of API data. October
WTI increased by .67 cents to settle at $45.50 a barrel within a trading range of $44.55-
45.58. The median forecast for crude stockpiles was to increase 905,000 barrel in the
week ended September 2 A prediction said that crude stocks fell 900,000 barrels the
week prior. Brent for settlement in November increased with by .72 cents to settle at
$47.98. Total volume traded was 27% below to a 100-day average.
9. On September 8, oil jumped the most in almost five months after the biggest drawdown
in U.S. crude inventories in 17 years. Crude inventories fell 14.5 million barrels last week,
according to EIA. A 905,000 barrel gain had been projected by analysts before the
release. Imports tumbled by 1.85 million barrels, while refinery activity increased. WTI
for October delivery rose $2.12, or 4.7 percent, to $47.62 a barrel in New York. Total
volume traded was 38 percent above the 100-day average. Brent for November
settlement climbed $2.01, or 4.2 percent, to $49.99 a barrel on ICE Futures Europe
Exchange. The global benchmark crude closed at a $1.73 premium to WTI. U.S. crude
supplies declined to 511.4 million in the week ended September 2. Inventories reached
543.4 million barrels. The stockpiles remain at their highest level in more than 20 years.
Refineries increased operating rates by 0.9 percentage points to 93.7 percent of capacity.
Refinery inputs of crude, natural gas liquids and other fluids into distillation units rose 1.6
percent to 17.3 million barrels a day.
On September 9, a sharp selloff in the stock market, in bonds and dollar strength put
downward pressure on all commodity market s and it took a toll on crude oil as well as it
fell back to $45.88 a barrel, almost giving back the entire gain of the day before and
keeping the near-term trend sort of neutral within the recent range.
Stela Martello
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