Higher Demand Mixed With Europe Energy Crisis Drives NGAS Prices, Cotton Futures, Gold Prices Touching One-Month Lows| FXMAG.COM

NGAS reached highest level since July 2008
1. Gold prices hit one month lows
2. Cotton prices trade close to two-month highs

Summary:

NGAS prices rising.
Gold prices fall as expectations for aggressive fed interest rate hiking persist.
Cotton prices supported by fears around global demand exceeding supplies.

NGAS reached highest level since July 2008

For the first time since July 2008, US natural gas futures surpassed the $10/MMBtu threshold, supported by expectations of higher demand for US LNG exports amid a worsening energy crisis in Europe. At the end of August, Russia's Gazprom announced that it would cease flows via the Nord Stream 1 pipeline to Europe for three days of maintenance. The region is under strain as it tries to refuel ahead of winter to avoid a natural gas crisis because the main pipeline between Russia and Europe is already operating at 20% capacity. The fact that the US is experiencing many heatwaves this summer and that temperatures are still high adds to the positive prognosis for the bullish prognosis for NGAS. Additionally, Freeport LNG recently reached an agreement with regulators to partially resume operations at its shut-down export plant in Texas in October and reported that it had started to take very small amounts of natural gas from pipelines. More natural gas will be taken out of storage once flows resume, which will increase exports.

✕ NGAS Sep ‘22 Futures Price Chart

Gold prices hit one month lows

Tuesday saw gold prices trading at one-month lows below $1,740 an ounce after six straight days of intense selling pressure due to fresh worries that the US Federal Reserve will continue to rapidly raise interest rates to combat inflation. A new surge in the dollar and Treasury yields was sparked last week by many US policymakers' hawkish remarks on the need for more tightening, which also decreased demand for metal. Additionally, traders are preparing for Fed Chair Jerome Powell's speech at the annual Jackson Hole symposium later this week, which may provide insight into the potential peak of US borrowing prices. The probability of a larger 75 basis point rate rise in September is currently higher than it was previously. While gold is widely considered as a hedge against inflation and economic uncertainty, higher interest rates raise the opportunity cost of holding non-yielding bullion.

✕ Gold Dec ‘22 Futures Price Chart

Cotton prices trade close to two-month highs

The price of cotton futures was trading close to a nearly two-month high reached on August 16 as traders weighed the likelihood of reduced global supplies against a slowing in demand. The most recent USDA data stated that due to drought, particularly in Texas, which generally accounts for more than half of the US plantings, US production for 2022–2023 is predicted to drop to 12.6 million bales, which would be the lowest level since 2009–2010. The USDA also decreased its forecasts for global cotton consumption and production by 800,000 bales and 3.1 million bales, respectively. Heavy rains and bugs have severely damaged the cotton fields in India, another top producer, to the point where the government is now importing cotton. The projection of production this year has come down to 31.5 million bales while consumption is 34.5 million bales.

✕ Cotton Oct ‘22 Futures Price Chart

Sources: finance.yahoo.com, tradingeconomics.com

Rebecca Duthie

Remote Editor and writer Intern

FXMAG.COM

Rebecca has a bachelors degree in Investment Management, a Post Graduate Diploma in Financial Planning and is currently enrolled in a Masters program in International Management with a Specialization in International Finance.