Gold Prices Struggle To Hold Monday’s Gains, Concerns Around NGAS Supplies Are Easing, Cotton - A Recession Sensitive Commodity
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Summary:
- UK, US, Japan and Canada all ban Russian gold imports.
- NGAS domestic inventories are rising.
- Favourable weather conditions are causing more hope of solid Cotton yields in top growing regions.
Gold prices trading at 2 week lows
The price of gold is trading at almost 2 week lows on Tuesday, this comes in the wake of continuous elevated US treasury yields. The metal struggled to hold onto Monday’s gains that came in the wake of the UK, US, Japan and Canada all officially banning the imports of Russian gold, the move has been viewed by the markets as largely symbolic as Russia’s exports to the west have already dried up. Although gold is widely considered as a hedge against inflation and economic uncertainties, higher interest rates raise the opportunity cost of holding non-yielding bullion.
Gold Aug ‘22 Futures Price Chart
NGAS price recovery
Natural Gas prices rose again, however they remain under pressure due to rising domestic inventories and milder temperatures which weighed on the demand for cooling. In addition, the most recent EIA report showed that US utilities injected more cubic feet of gas into underground storage than was expected.
NGAS Jul ‘22 Futures Price Chart
Cotton prices due to be impacted by a recession
Cotton futures prices dropped to 9 month lows in the wake of growing recessionary concerns and increased prospects of a lower demand. Cotton is known to be a recession sensitive commodity, thus, cotton prices are set to be impacted by major banks’ rising interest rates in an attempt to fight inflation and the slowdown in both consumption and economic activity. In addition, favourable weather conditions are causing more hope of solid yields in top growing regions.
Cotton Oct ‘22 Futures Price Chart
Sources: finance.yahoo.com, tradingeconomics.com
