Commodities continue to struggle across most of the board going into Thursday’s trading. Gold as of this morning is trading near 1276.00 USD as of this writing. Copper remains under pressure. And Silver has also continued to be a punching bag. While Crude Oil trades in the higher realms of its range, most other physical resources show that demand and even a speculative flair among traders have been dampened. Agricultural commodities also continue to struggle from Corn to Cattle. Digital Markets Advisor expects that values among the commodities will see more downward pressure through the mid-term. Yes, ranges and daily fluctuations will no doubt add fireworks to the trading floors of Chicago, New York, London, and elsewhere but the global economic outlook remains dim and because of this it is now a buyer’s market among the physicals.
The outlook in Gold remains fascinating, while the metal is certainly under an immense amount of selling pressure, the fact remains that central banks have been creating a massive amount of cheap money. Meaning that eventually it is likely that inflation will rear its head, when that day occurs, or more exactly – when those days are widely believed to be coming Gold will find plenty of buyers very quickly. The question at this juncture for long-term players is how low can Gold really go? While short-term pressures will certainly be felt due to the overall psychology of the market particularly within the physical resources, Gold might become a buy in the mid-term.
Chinese data remains under deep suspicion. And a glance into the looking-glass will not please most Chinese real estate speculators. The Chinese population has accumulated massive debt as they have participated in the housing market and at some point when the bubble burst there will be storms. Stories about ghost cities in China are not merely rumors and all anyone has to do is a bit of research on the internet to find a glut of evidence. Digital Markets Advisor’s point is that China faces a double-edged sword domestically and internationally. The global economy is putting a crimp in demand for exports and this will only add more fuel to the fire.
Housing data from the U.S. also caused a few hiccups yesterday. The Fed has used the housing market to point to a stabilization of conditions. But first hand conversations with builders continues to underline that construction remains in a precarious spot and egos are fragile. Today the States will see weekly Unemployment Claims and the Philly Fed Manufacturing Index. Ben Bernanke will continue his tour of Congress today as he testifies before the Senate and tries to walk his tight rope.