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Oil prices rose on Tuesday after the U.S. Memorial Holiday buoyed by hopes of better demand as investors await a crucial OPEC meeting, while gold prices fell after finishing last week in the red.
Brent oil (CO1:COM) shed about 2% last week and WTI (CL1:COM) nearly 3% as FOMC minutes showed some officials would be willing to raise interest rates further if it deemed necessary to control sticky inflation. Higher rates also weigh on the demand outlook for oil as it reduces the flow of liquidity into the economy, which negatively influences consumer spending.
Investor focus now turns to the U.S. inflation data and OPEC meeting, which is scheduled on June 2.
The U.S. Memorial Holiday is the traditional start of the summer driving season. Early signs indicate a relatively strong level of holiday travel, but gasoline consumption may be tempered by improved fuel efficiency and electric vehicles, ANZ Research said in a note. Crude oil prices were also supported by rising tensions in the Middle East, the brokerage added.
On the company side, Hess (HES) shareholders on Tuesday will decide on its planned $53B sale to Chevron (CVX), widely expected to be a close vote as investors remain concerned over the ongoing dispute with Exxon Mobil (XOM) for Guyana’s Stabroek Block.
Turning to metals, spot gold prices (XAUUSD:CUR) meanwhile ticked lower despite the ongoing Middle East tensions, as traders focused on the core personal consumption expenditures price index (PCE), the Fed’s preferred inflation measure, due on Friday.
“It’s hard to say if the price has found a floor yet. It’s been a bad week for the precious metal,” David Morrison, senior market analyst at Trade Nation, said in a note Friday.
Comex gold (XAUUSD:CUR) fell about 3% last week as it slipped to $2,335.20/oz on Friday. Gold pulled back after hitting a record high of $2,454.20/oz on May 20.
Max Layton, Citi global head of commodities research meanwhile told Bloomberg Television, gold is on track to reach $3,000 in the coming 12 months. He also comments on what he calls “off the charts” demand for gold coming from China, where the market is seeing a “big shift” from property spending into gold retail.
“We’ve got five Fed cuts this year, lowering rates into the end of the year, early next year, and that’s certainly going to be, we think, the backbone of the next move higher in gold,” Layton said.
Recent Commodity Price Movements and A look At Some ETFs
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Energy
- Crude oil (CL1:COM) +0.47% to $78.96.
- Natural Gas (NG1:COM) -0.02% to $2.50.
Metals
Agriculture
- Corn (C_1:COM) +0.23% to $467.07.
- Wheat (W_1:COM) -1.17% to $706.66.
- Soybeans (S_1:COM) -0.46% to $1,244.35.
Commodity ETFs
Gold ETFs:
- SPDR Gold Shares ETF (GLD)
- VanEck Gold Miners ETF (GDX)
- VanEck Junior Gold Miners ETF (GDXJ)
- iShares Gold Trust ETF (IAU)
- Direxion Daily Gold Miners Index Bull 2X Shares ETF (NUGT)
- Sprott Physical Gold Trust (PHYS)
Other Metal ETFs:
- iShares Silver Trust ETF (SLV)
- Sprott Physical Silver Trust (PSLV)
- Global X Silver Miners ETF (SIL)
- U.S. Copper Index Fund, LP ETF (CPER)
- abrdn Physical Palladium Shares ETF (PALL)
Oil ETFs:
- U.S. Oil Fund, LP ETF (USO)
- Invesco DB Oil Fund ETF (DBO)
- U.S. 12 Month Oil Fund, LP ETF (USL)
- U.S. Brent Oil Fund, LP ETF (BNO)
- U.S. Natural Gas Fund, LP ETF (UNG)
- U.S. Gasoline Fund, LP ETF (UGA)
Agriculture ETFs:
- Invesco DB Agriculture Fund ETF (DBA)
- Teucrium Soybean ETF (SOYB)
- Teucrium Wheat ETF (WEAT)
- Teucrium Corn Fund ETF (CORN)
Insight: Adding more commodities to your investment portfolio diversifies your risk, as different commodities react differently to market conditions. Gold can act as a hedge against inflation due to its historic resilience in times of economic uncertainty. Additionally, investing in oil and metal ETFs can provide exposure to different sectors within the commodities market, allowing for broader portfolio diversification.
