The unstoppable ascent of gold to new record highs continues to confound many, as an uptick in oil prices increases the expense for traders seeking protection against the rising costs of crude in a decidedly bullish market. Meanwhile, the anticipation builds for the US Department of Agriculture's forthcoming report on global demand, at a time when American farmers are experiencing the most favorable post-winter wheat conditions in recent memory.
Noteworthy developments include the dismissal of RBC's CFO Nadine Ahn after an investigation into a personal relationship, a decline in church attendance attributed to Trump's brand of Christian conservatism, Saudi Arabia's scaled-back ambitions for the $1.5 trillion desert project Neom, Turkey's suspension of a European arms treaty alongside NATO allies, and Mark Zuckerberg surpassing Elon Musk in wealth for the first time since 2020.
As the week begins, here are five essential charts within the global commodity markets to consider:
Despite rising Treasury yields, which typically dampen gold's appeal, the metal's price soared past $2,300 an ounce last week. This unexpected rally is fueled by significant central bank purchases and heightened demand in China. While a short-term pullback might be on the horizon due to the current overbought conditions, the overall outlook for gold remains positive. Speculative trading could drive further increases, especially if the Federal Reserve decides to lower interest rates, potentially reigniting interest in gold-backed ETFs after a period of outflows.
For the first time since November, the cost for oil options traders to hedge against higher crude prices has increased. This shift towards a preference for bullish call options over bearish puts highlights the strong optimistic sentiment in the crude oil market, further amplified by geopolitical tensions. Last week, Brent crude prices breached the $90 a barrel mark for the first time since October, with West Texas Intermediate also experiencing a significant surge.
The US wheat market is witnessing a revival just as demand for wheat-based foods declines among health-conscious consumers. Improved conditions following a drought have led to the healthiest wheat crops in four years. However, with flour production decreasing and American farmers facing stiff competition from Russia's cheaper exports, domestic demand for wheat is waning. The upcoming USDA World Agriculture and Demand Estimates report is eagerly awaited for insights into wheat and other crop demands.
Coffee prices are skyrocketing, with both robusta and arabica beans experiencing significant price increases. Robusta futures are near record highs due to a heatwave in Vietnam, the leading exporter, threatening production and exacerbating concerns over tight global supplies. Meanwhile, arabica beans, preferred by companies like Starbucks, have reached their highest price in 17 months. The industry is looking to Brazil, the top arabica producer, for potential relief when export data is released later this week.
The electric vehicle (EV) market may encounter obstacles that could slow its growth globally, according to a report from BloombergNEF. Challenges include regulatory changes in Europe, market saturation in China, and uncertainties surrounding the US presidential election, which may impact consumer confidence. Despite these potential hurdles, BNEF predicts a 22% increase in global passenger EV sales this year, although this represents a slowdown from last year's 30% growth rate.
