Commodities collectively had their worst monthly performance in more than two years during July and the group could “push somewhat lower” in August, says INTL FCStone in a monthly outlook. The firm describes August as usually a “messy month” for equities leading to an “even sloppier” September. “If we are correct on our view on U.S. equities, we could see spillover selling hitting precious metals, oil, and some of the base metals, at least initially, before the various asset classes start to decouple,” INTL FCStone says. “Gold is already struggling under the prospect of decent growth in both China and the U.S., lackluster investment demand, poor technicals and the likelihood of higher U.S. rates going into 2015. Platinum and palladium could also ease a bit this month, although their fundamentals look much better than gold. Oil markets are oversupplied and with various geopolitical hotspots not imperiling oil flows, at least for the moment, we think the path of least resistance is lower still. We believe that lower trading ranges are also in store for energy products, as well as for natural gas. Base metals have regained some lost ground this week, but we think that some in the group are overextended based on fundamentals. Zinc, in particular, is now at a three-year high and we believe prices have more than discounted the complex’s improving supply/demand profile, while not adequately discounting the very real possibility of a further contraction in the Chinese real estate market.” However, INTL FCStone says lead “has not participated fully in the recent base metals advance and we still like its story heading into the second half of the year.” The firm describes itself as neutral on copper at current prices, looking for a sideways range this month.
Source: Kitco
Source: Kitco
