Commodities Wrap 5 August: Gold Surges 3.9 Percent as Oil Steadies After Slide

By The Edge Research Team

Gold surged 3.93 percent on Wednesday 5 August to 4,316.00 dollars an ounce, leading a broad advance in precious metals, while crude oil steadied after two sessions of heavy selling, leaving the commodity complex tilted firmly toward the metals. Brent crude was little changed at 79.26 dollars a barrel, down 0.13 percent, and West Texas Intermediate eased 1.10 percent to 74.94 dollars, per CNBC. The combination of a soft dollar, falling Treasury yields and a fading equity-volatility bid pushed money into the metals complex for a second day, our reading.

Energy found a floor after the post-OPEC+ slide of roughly 10 percent on Brent across Monday and Tuesday. Heating oil eased 0.13 percent to 3.7656 dollars a gallon and natural gas slipped 0.37 percent to 2.672 dollars per million British thermal units, while RBOB gasoline fell 0.95 percent to 2.8250 dollars, per CNBC. The stabilisation, with Brent holding near 79 dollars, is consistent with the market having largely absorbed the OPEC+ September increase, our reading.

Precious metals extended their advance with force. Gold jumped 3.93 percent, or 163.40 dollars, to 4,316.00 dollars an ounce, its second straight day of strong gains, while silver climbed 3.60 percent to 62.415 dollars, per CNBC. Copper firmed 1.61 percent to 6.7505 dollars a pound and palladium added 1.12 percent to 1,376.00 dollars, while platinum was little changed at 1,753.20 dollars after Tuesday’s 8 percent jump. The gold-to-silver ratio held near 69.2, our calculation, as the two metals rose broadly in step.

Agriculture was mixed with a softer tilt in the row crops. Sugar rose 0.86 percent to 15.17 cents a pound, cotton 0.81 percent to 83.13 cents and wheat 0.78 percent to 643.5 cents a bushel, while rough rice added 0.61 percent and coffee 0.57 percent, per CNBC. On the downside, cocoa gave back 1.28 percent to 5,848 dollars a tonne after Monday’s surge, corn eased 1.02 percent to 460.75 cents and soybeans slipped 0.17 percent.

Across the wider markets, the United States Dollar Index fell 0.14 percent to 99.715, while the euro firmed to 1.1550 dollars and sterling to 1.3460, per CNBC. The dollar was quoted at 157.81 Japanese yen. Treasury yields edged lower across the curve, with the ten-year at 4.611 percent, and the CBOE Volatility Index dropped 4.18 percent to 15.81 as equity hedging demand faded. Bitcoin rose 1.03 percent to 64,925 dollars, and the Egyptian pound held below the 50 line at 49.75 per dollar.

Why it matters: The rotation into precious metals is now the dominant commodity story of the week, and it carries direct weight for the region. Gold above 4,300 dollars lifts the mark-to-market value of the official gold holdings of the region’s central banks for a second day, while the stabilisation in crude near 79 dollars on Brent steadies the revenue outlook for Saudi Arabia, Kuwait, the United Arab Emirates and Oman after two heavy sessions. Lower Treasury yields and a softer dollar ease financing conditions for the dollar-linked Gulf economies, and for Egypt and Jordan the combination of oil well below last week’s levels and a firmer pound reduces imported-cost pressure from both directions.

Outlook: The immediate question is whether gold consolidates or extends after adding close to 4 percent in a day, and the answer runs through Friday’s July United States jobs report, our reading. A soft report would reinforce the falling-yield, weaker-dollar backdrop that has powered the metals, while a strong one would test the move. For oil, the marker is whether Brent holds the 79 dollar area as the market digests this week’s United States inventory data. The drop in the volatility index below 16 suggests equity markets have moved past Monday’s technology wobble, which supports the broader risk backdrop the Gulf trades against. We will carry the next wrap after Thursday’s close.

Data note: commodity levels are CNBC late-session snapshots on the day’s active contracts, not a single uniform exchange settlement, and the rate, currency and cryptocurrency figures are timestamp-sensitive.

Table Energy, 5 August, ranked by change:

Table Metals, 5 August, ranked by change:

Table Agriculture, 5 August, ranked by change:

Table Rates, currencies, volatility and crypto, 5 August:

Sources: CNBC.

Get Complimentary Insights

Follow us