In commodity ETC trading, most of the action revolves around gold. However, the recent decline in gold prices has wiped out this year's gains. The oil price, on the other hand, went up rapidly.
6 October 2023. FRANKFURT (Börse Frankfurt). The higher interest rates, which will probably continue for a longer period of time, are not only weighing on the stock markets; the price of gold has also dropped significantly. At midday on Thursday, the price of a troy ounce was only 1,820 US dollars - the same as at the beginning of the year. A month ago it was still 1,944 U.S. dollars, in May even almost 2,060 U.S. dollars. "The sharp rise in yields at the long end and the interest rate outlook of 'high for longer' have recently put a noticeable damper on the gold price," notes Ulrich Kater, chief economist at DekaBank. Because with higher interest rates, gold loses its attractiveness in view of the increased opportunity costs. According to Barbara Lambrecht of Commerzbank, the strong U.S. dollar is also playing a role alongside rising yields. However, this is not likely to last. The bank expects - unlike many in the market - a recession in the US. "That should put pressure on the U.S. dollar and boost the gold price," the commodities analyst says.
"All markets are currently under the spell of developments in the bond markets," Michael Blumenroth, commodities analyst at Deutsche Bank, puts it. If yields continue to rise, he says, it will be an unfavorable development for gold prices. "However, if we have soon seen the peak, there could also be a countermovement in gold prices."
High turnover with gold ETCs
In trading with commodity ETCs on the Frankfurt Stock Exchange, once again most of the activity revolves around gold price trackers. Besides Xetra-Gold (DE000A0S9GB0), gold ETCs from Xtrackers (DE000A2T5DZ1), Amundi (FR0013416716) and WisdomTree (JE00B1VS3770, GB00B00FHZ82) are currently showing high turnover. At Lang & Schwarz, there is a lot going on specifically in Xetra-Gold (DE000A0S9GB0) and in iShares Physical Gold (IE00B4ND3602), as Fabian Wörndl notes, in both directions. Above all, he sees buying in a silver price tracker with leverage 3, the WisdomTree Silver 3x Daily Leveraged (IE00B7XD2195). Xetra gold holdings remain at a high level, currently 223 tons. However, at the end of 2022 it was 231 tons, at the end of 2021 238 tons.
Oil price: increase of more than 30 percent
There has been even more movement in the price of oil. From 70 U.S. dollars in June to a peak of 95 U.S. dollars two weeks ago, the price of a barrel of North Sea Brent crude has climbed. In the past few days, however, it went down again significantly, on Thursday morning it is again only 86 U.S. dollars. For the price rise the announcement of the promotion countries Saudi Arabia and Russia was responsible to hold on to the offer cuts valid since July until the end of the year. However, economic skepticism is now spreading again. And if the economy is not running smoothly, there will also be less demand for oil.
Energy ETCs like to use leverage
In the meantime, the swings in the gas price are smaller. The forward contract for Dutch natural gas (Dutch TTF), which is relevant for Europe, is currently at 33 euros/MWh, somewhat below the level of a month ago. Last summer, it was briefly over 300 euros/MWh, which was followed by a decline to 23 euros/MWh in June of this year.
A lot is currently going around in WisdomTree Brent Crude Oil 3x Daily Short (IE00BLRPRK35) and WisdomTree WTI Crude Oil 2x Daily Leveraged (JE00BDD9Q840). Lang & Schwarz's Wörndl also reports good turnover for the triple-leveraged short ETC, but also two leveraged gas ETCs from WisdomTree (IE00BLRPRG98, IE00B76BRD76). "These are buys and sells."
Industrial metals prices are under renewed pressure, even though they are off summer lows. "The strong U.S. dollar in particular is weighing," notes analyst Lambrecht. WisdomTree Industrial Metals (GB00B15KYG56) is still down 13.4 percent year-to-date.
by: Anna-Maria Borse, 5 October 2023, © Deutsche Börse AG
Anna-Maria Borse is a finance and economics editor specializing in financial markets/stock markets and economic topics.
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