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Saturday, Aug. 27, 2016

Precious Metals Hammered Lower

Posted Tuesday, October 26, 2010, at 11:54 AM

Precious metals fell hard this week amidst uncertainty surrounding government stimulus measures. Gold prices fell $48 per ounce (-3.5%) this week, the largest drop since July. Silver followed gold lower, losing $1.15/oz (-4.7%). A stronger U.S. Dollar and lower energy prices also helped to pressure metals prices lower.

Many traders described this week's drop as a "healthy correction" which may be slowed down by bargain hunters buying gold and silver at lower prices. As of midday Friday, gold for December delivery was hovering near $1325 per ounce, while December silver was trading near $23.15 per ounce.

Livestock Markets Drift Apart

Price-conscious grocery shoppers may find themselves choosing pork over beef in the coming weeks as cattle prices continue to rise sharply above hogs. The two markets generally move in the same direction, but they have recently become disjointed. Since early October, cattle prices have risen to $1.01 per pound (+5.2%), while hog prices have plummeted to 69 cents a pound (-6.8%) over the same time period.

Heavier hog weights and farmer selling have combined to pull the hog market downward, while cattle prices have been propped up by strong exports and the prospect for a colder than usual winter in the Northern Plains. Major livestock reports will be released Friday after the markets close, which could open the door for wild trading on Monday.

With cattle trading at nearly a 50% premium over hogs, many traders see an opportunity if the relationship between cattle and hog prices return to their typical relationship where cattle prices are only 30% higher than hogs.

Southern Drought Drives Cotton Sky High

Worsening drought in the Southern U.S. and strong Chinese demand continue to push cotton prices higher. Cotton shot "limit up" on Friday, rising the exchange-limited 4 cents per pound to $1.1971, the highest closing price for cotton since the Civil War.

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Commodity Futures File
Alex Breitinger
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Alex Breitinger, a 2009 graduate of DePauw University, is a commodity futures broker with Breitinger & Sons, LLC in Valparaiso. He can be reached at 800-411-FUTURES (3888) or online at www.indianafutures.com.
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