Market and product

-The US Federal Reserve stated that the US economy faced a serious downside risk. At a time when investors were looking for a positive action from the fed, the negative outlook sparked a global selloff in which asset classes from commodities to shares fell like a pack of cards.

-China’s growth, which investors were looking to balance the slowing US and European economy, gave first indications of contraction. And the possibility of the scenario was enough to spook investors as they dumped base metals like copper and lead. Given that the commodity price boom over the past years has been supported by the robust growth in China, this should come as no surprise. HSBC had earlier released their preliminary PMI data which indicated that the Chinese economy had contracted in September.

- Industrial growth is stagnating in Europe. French PMI declined. German industrial orders declined. Greek default looks a European credit freeze looks highly possible.

COMMODITY PERFORMANCE THIS WEEK (19 sept-23 Sept)

BASE METALS

PRECIOUS METALS

ENERGIES

Outlook next week

-Gold may stabilize as the dollar weakens. The bleak economic outlook of the US should weaken the dollar. As such Gold can be expected to rise since the European debt crisis is not going to subside anytime soon.

-Base metals may remain weak until any positive indication from China is available. Prices may rebound a little. But the strength has been drained due to a worrisome Chinese economy.

-Crude oil is also expected to remain under tremendous pressure on expectations of a weak economy. Though Natural Gas ended in the positive, the gain was very marginal.