Citi: Investors ‘Taking Commodities More Seriously’ As Portfolio Diversifier

Monday April 14, 2014 11:45 AM Investors are returning to commodities, says Citi Research. Passive commodity index swap trading data for the first week of the second quarter suggest net inflows of $800 million amid roughly 1.7% total returns for both the Dow Jones-UBS and SPGSCI benchmarks, Citi says. Combined with listed commodity-linked exchange-traded funds, year-to-date total inflows are $5.8 billion, Citi says. While this represents only a 12% recovery of new investment money after $50 billion of net redemptions across the passive indexes in 2013, the data does suggest some stability for the asset class, which has rallied 8.5% compared to a 1.5% loss for U.S. equities in the year to date, Citi says. “Investors appear to be taking commodities more seriously as a portfolio diversifier as positive correlations with traditional asset markets have unwound and commodities have lost their tight negative correlation with the U.S. dollar,” Citi says. By Allen Sykora of Kitco News; asykora@kitco.com

INTL FCStone: Nickel Soars While Other Base Metals Subdued Monday April 14, 2014 9:18 AM

London Metal Exchange nickel prices have soared to their highest level in more than a year while the rest of the base-metals complex is quiet, says Edward Meir, commodities consultant with INTL FCStone. Three-month copper is down 0.1%; meanwhile, nickel was up $356, or $2.1%, to $17,756 a metric ton as of 9:10 a.m. EDT. Meir says an Indonesian ban on ore exports continues to push prices higher. “We are also finally seeing drawdowns in LME inventories, with nickel stocks now down by some 6,000 tons over the past month — their first sustained decline in almost two years,” Meir says. “More importantly, there are reports that some of the massive nickel ore inventories that have accumulated at Chinese ports are also being whittled lower.” The metal peaked at $17,917 a ton, its strongest level since February 2013. By Allen Sykora of Kitco News; asykora@kitco.com

 Morgan Stanley: Fed Minutes, Ukraine, Equities Boost Gold In April. Morgan Stanley: Fed Minutes, Ukraine, Equities Boost Gold In April Monday April 14, 2014 8:04 AM

With the early-Monday gains, Comex gold has risen on seven of 10 trading days so far in April. “Gold has rallied since the start of April as the Fed minutes (from a mid-March meeting) suggested U.S. interest rates will stay lower for longer and tensions in the Ukraine prompted some investors to head to safe-haven assets,” says Morgan Stanley. “Recent equity market volatility is also a likely driver, though we note on a net basis that metal has been flowing out of the ETFs (exchange-traded funds) for two weeks now, suggesting there may not be a lot of strength from the retail side of the investment.” As of 7:48 a.m. EDT, June gold was up $3.40 to $1,322.40 an ounce and peaked at $1,330.80, its strongest level since March 24. By Allen Sykora of Kitco News; asykora@kitco.com

Barclays: Risk Aversion Continues; Gold Rises Monday April 14, 2014 8:02 AM

A broad-based equity sell-off occurred over the last week, with this and Ukrainian geopolitical tensions adding to a stronger tone in gold prices overnight, says Barclays.  “The S&P 500 posted its sharpest two-day drop since June 2013, led by technology stocks and driven by disappointing initial earnings results,” Barclays says. “Risky assets remained out of favor in Asia today amid a lack of catalysts ahead of China’s Q1 GDP (first-quarter gross domestic product) report and March activity data. Equity indices fell and EM (emerging-market) Asia currencies weakened against the USD (dollar); however, given the holiday-shortened week, volumes were low. Lastly, a pickup in geopolitical risks over the weekend also triggered a safe-haven bid as reflected in stronger gold and USTs (U.S. Treasury securities), while oil prices continued to march higher.” By Allen Sykora of Kitco News; asykora@kitco.com

 

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