Written by Sumit Roy  |

October 26, 2012

Week In Review: Gold & Silver Outperform As They Try To Build Price Floor; WTI, NatGas & Platinum Plunge

Details

We examine the latest developments in commodity markets and the week's performance.

Global growth concerns re-emerged as a downside driver of markets this week. With the exception of soybeans and silver, commodities fell across the board. Stocks, as measured by the S&P 500, fell almost 2 percent to the lowest level since early September amid a relatively disappointing third-quarter corporate earnings season.

Macroeconomic Highlights

On Nov. 6, Americans will head to the polls to cast their ballots for the next president of the United States. No matter who is elected, he will have to work with a lame-luck Congress to avert automatic tax hikes and spending cuts that will go into effect barring intervening legislation.

Investors are understandably worried that political brinksmanship could potentially preclude a bipartisan agreement, sending the country over the “fiscal cliff.” That would obviously be a very bearish outcome for all risk assets, including commodities.

That said, for the most part, economic data this week was on the positive side. The latest GDP figures showed that the U.S. economy grew by 2 percent annualized in the third quarter, faster than the anticipated 1.8 percent and up from 1.3 percent in the second quarter.

Meanwhile, the U.K. economy performed better than expected in the third quarter. Gross domestic product in the country rose by 1 percent from the second quarter, besting the 0.6 percent increase that was anticipated. Year-over-year, GDP was flat, better than the decline of 0.5 percent that analysts were forecasting.

In Asia, a major Japanese newspaper reported that the Bank of Japan may increase the size of its asset-purchase program by 10 trillion yen ($125 billion) at its next policy meeting on Oct. 30.

This week’s Federal Open Market Committee meeting ended quietly, as the central bank maintained the size of its quantitative easing program at $40 billion per month.


Commodity Wrap