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USD takes shine off Gold rally - can commodities make a comeback?
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Saxo Bank's Head of Commodity Strategy Ole Hansen rounds up the highlights of the commodity market week. After three weeks of gains markets were hit by USD fluctuations with the clearest example seen in Gold.
Lower US crude production and inventories are supporting WTI prices with prices set for a record 10th week of gains after surging above $60/barrel overnight and now in their longest winning streak since records began in 1983. However, USD has had an impact in oil markets as well. Brent crude has been at $66.53/b. WTI at $60.71/b, up from $59.09/b yesterday.
The El Nino weather phenomenon is back and with it fears about crops. However Ole explains why markets are, so far, not showing any dramatic reaction to the threat of extreme weather. For example, Coffee prices have been falling. More concerning for the cocoa harvest is an outbreak of a fungal infection which could affect 25% of Ghana's crop, the West African state world's second largest producer of cocoa.
Finally Ole's trade tip this week is based on the Wheat - Soybean ratio.