Edith Southammakosane, Director – Multi-Asset Strategist, ETF Securities, has commented on major commodity prices showing signs of recovery and oil benchmarks posting positive returns for the third consecutive week.
“Last week investors continued to pile into gold ETPs for the ninth consecutive week, recording inflows of USD79.2 million,” she writes. “Buoyant US non-farm payroll for February combined with an upward revision of December and January payroll data failed to weigh on gold prices as one would expect. Strong labour market data signals the US economy is recovering and is likely to increase the odds for another rate hike by the US Federal Reserve (Fed) on March 16.
“While expectations of rate hikes usually weigh on gold price, heightened uncertainty in cyclical markets has seen demand for gold and its price rise as investors look for safety in a haven asset. While silver has failed to follow gold prices higher, inflows last week were more comparable, with USD72.8 million of inflows into silver.”
Edith adds that a surge in oil prices has triggered the first ETPs outflows since December 2015.
“Last week saw Brent and WTI surging 5 per cent and 4.5 per cent respectively. Both benchmarks were trading around their two-month highs for most of the week. Surging oil prices seems to indicate that the reduction of oil production in the US combined with keys OPEC members’ decision to freeze production at January levels could be sufficient to reduce the oversupply on the global oil market. Despite larger-than-expected stockpile, US oil production declined for the sixth consecutive week the level last seen in November 2014, lending support to oil prices.”