Weekly Round-Up: Strong US Dollar Weighs Down Commodities

With the returning strength of the US dollar, commodities across the board fell during the week ending May 17.

Investors are predicting that the demand for gold will continue to wane after prices suffered their seventh straight loss on Friday. Gold for June delivery fell $23 to $1,363.70 an ounce.

Ric Deverell, head of commodities research at Credit Suisse Group AG, predicted that gold prices will continue to decline over the next five years and that we will see gold being traded at below $1,000 an ounce in 2018, reported MarketWatch. Though there has been a recent uptick in demand for gold bars, coins and jewelry, Deverell predicts that it is temporary.

“This is bargain-buying,” he said. “It’s like when you have cash for clunkers in autos, you bring forward activity, but it’s not a massive addition to buying.”

Silver similarly saw a poor turnout last week, falling $0.31 to $19.30 an ounce, a 4.8 percent drop for the week. On Friday, copper saw 1 percent growth, adding $0.04 per pound to reach $3.305 for the week. Overall, copper dropped 0.7 percent for the week.

Coupled with a rising stock market, crude oil futures climbed last week with June delivery rising $0.74 to $95.78 a barrel on Friday, though earlier in the day they topped $96 per barrel. The gains that crude oil saw at the end of the week nearly eliminated a weekly loss of less than 1 percent. This would mark the first weekly pullback for oil since mid-April.

According to MarketWatch, Miswin Mahesh of Barclays believes that there are still fundamental factors faced by crude oil that could bring down prices.

“We continue to see very few constructive elements across the demand-supply equation for crude oil,” Mahesh said.