The time of big swings on the commodity markets is over. Gold and oil prices are treading water or falling slightly. Corresponding ETCs are bought, but rather in small doses. A lot is being bet on the gas price trend.
22 June, 2023 FRANKFURT (Börse Frankfurt). After the gold price rally that lasted until May, it has become quieter around the precious metal. The troy ounce costs "only" 1,928 U.S. dollars again on Thursday morning - well below the 2,060 U.S. dollars reached at the peak one and a half months ago, but well above the 1,820 U.S. dollars at the beginning of the year. "Market participants in the gold market are disappointed that interest rate hikes in the U.S. may not be over after all," notes commodities analyst Barbara Lambrecht of Commerzbank.
However, she believes that the gold price correction is largely over. "Prices are unlikely to recover, however, until it is clear that U.S. key interest rates have peaked." According to Dora Borbély of DekaBank, inflationary issues and higher interest rates are also already largely factored into prices. "As long as there are no new, resilient findings here, the sideways movement of the gold price will continue at the rather high level."
Gold ETCs: Neither a rush nor a sell-out
High turnover on the Frankfurt Stock Exchange currently show, in addition to Xetra-Gold (DE000A0S9GB0), gold ETCs from Xtrackers, WisdomTree and Amundi. At Lang & Schwarz continues to go in Xetra Gold much, in addition, still in the iShares Physical Gold (IE00B4ND3602) and in the WisdomTree Physical Swiss Gold (JE00B588CD74), as Fabian Wörndl reports.
High outflows from gold ETCs had not continued in May, but there were no large inflows either. "Substitution is the key word," is how Munich-based ETP analysis and trading house Crossflow puts it. For example, the Invesco Physical Gold did rank second in net inflows with 710 million, it said. "However, outflows in other gold products ultimately provided net new funds of only 344 million euros in this product category." Year-to-date, there are still net outflows of just over €1 billion, according to Crossflow.
Xetra Gold's holdings are no longer increasing, but remain at a high level of 227 tons. By comparison, it was 231 tons at the end of 2022 and 238 tons at the end of 2021.
Gold ETCs continued to dominate ETC trading on Xetra throughout May. As usual, Xetra Gold was the top trader. Also heavily traded were Xtrackers Physical Gold Euro Hedged (DE000A1EK0G3), iShares Physical Gold (IE00B4ND3602), Xtrackers IE Physical Gold (DE000A2T0VU5) and Invesco Physical Gold (IE00B579F325). Silver ETCs such as WisdomTree Physical Silver (JE00B1VS3333) also saw a lot of turnover. It is not until 12th place that we find the first non-precious metals ETC, namely WisdomTree Natural Gas 3x Daily Leveraged (IE00BLRPRG98).
Gas and oil price tracker: speculating with leverage
The gas price continues to attract a lot of attention: The forward contract for Dutch natural gas (Dutch TTF), which is relevant for Europe, had fallen to 23 euros/MWh at the beginning of the month. After the outbreak of the Ukraine war, it had temporarily been over 300 euros/MWh. Currently it is 37 euros. The strong price decline attracts speculation on the further price development: At Lang & Schwarz, there is still a lot of activity in leveraged gas ETCs, such as the WisdomTree Natural Gas 3x Daily Leveraged (IE00BLRPRG98) and the WisdomTree Natural Gas 3x Daily Short (IE00B76BRD76).
The oil price did not fall quite as much. The price for a barrel of the North Sea sort Brent lies with up-to-date 76,65 US dollar however likewise clearly under the 116 US dollar from the spring 2022, reached in the point. Also since beginning of this year, when the barrel still cost 84 US dollar, a minus results. Barbara Lambrecht points to concerns about demand and inventories: "The prospect of possible further U.S. interest rate hikes, which could curb demand in what is still the largest consumer country for oil, weighed on prices recently, as did an unexpectedly strong build in U.S. oil inventories." On the other hand, warnings from the International Energy Agency (IEA) that the market would be significantly undersupplied in the second half of the year repeatedly fizzled out, he said. However, the bank expects strong demand in Asia to more than compensate for weakness in Western industrialized countries and - with reduced supply from Opec+ countries at the same time - to tighten the market. "Oil prices will pick up significantly in the second half of the year."
According to Crossflow, there were net inflows into energy ETCs in May, but to the tune of just €50 million. Since the beginning of the year, the figure is still 945 million euros. High turnover on the Frankfurt Stock Exchange is currently seen in WisdomTree WTI Crude Oil (GB00B15KXV33). Leveraged oil price trackers are popular at Lang & Schwarz, such as the WisdomTree Brent Crude Oil 3x Daily Short (IE00BLRPRK35) and the WisdomTree WTI Crude Oil 2x Daily Leveraged (JE00BDD9Q840). "They trade a lot in both directions," Wörndl explains.
Industrial metals: still in the red
Industrial metals prices have recently increased somewhat, to be sure. "Boosts came from hopes of a stronger pickup in Chinese demand after China's central bank slightly lowered interest rates, prompting speculation of further stimulus measures," notes Lambrecht. Some metals have also received support from disappointing supply developments, he adds. Year-to-date, however, industrial metals - as measured by the heavily traded WisdomTree Industrial Metals (GB00B15KYG56) - are still down 14 percent.
By: Anna-Maria Borse, 22 June, 2023, © Deutsche Börse AG
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Anna-Maria Borse is a finance and economics editor specializing in financial markets/stock markets and economic topics.
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