Daily commodities analysis

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Gold Falls as Investors Buy Dollars :

Gold investors are the least optimistic in 5 weeks as due to political problems in Europe. All gains of 2012 have been lost recently as investor turn to USD seeing stronger-than-expected US economic growth.

Gold had risen 14% percent to $1,792.70 by Feb. 28 on the Comex in New York, before falling to $1,585 today.

Bullion reached a record $1,923.70 in September 2011. Prices have since fallen as as the USD became the safehaven asset. Barclays lowered its 2012 forecast by 8 percent to $1,716 yesterday because of political problems and mounting debt in Europe and concern that Asian (especially Chinese) economy growth will continue to slow.

 

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Gold Prices Continue to Fall over European Debt

The price of gold rose steadily this year, but has since falling to the same level as early January. Europe’s debt crisis isn’t going away, and political instability is on the rise in many countries. France has a new socialist government, Italy recently replaced theirs, and Greece’s parliament is deadlocked without a coalition ruling party.

June gold futures dropped 1.5% to $1,560 and spot gold prices dropped 1.4% to $1,556.

Initially gold had rose steadily in 2012 due to record low interest rates in Europe and the United States.

Gold had rallied amid record-low interest rates from Europe to the U.S. The Federal Reserve has promised to keep rates at “exceptionally low levels” until late 2014.

Gold prices have been floating below its 200-day moving average for several weeks now. This is a sign to technical traders that the price of gold can still fall further down. Gold call options betting on higher gold prices are at the lowest level since December 2008.

 

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Iraq Oil Output Looks to Exceeds Iran – First Time In 24 Years

Iraq is pumping out oil at the highest rate since Saddam Hussein’s era. This production is being led by foreign partners like Exxon Mobil and British Petrolium. They are developing new oil fields and renovating older wells.

The country produced 3.03 million barrels a day in April, 7.7 percent more than in March, while Iranian production declined to 3.2 million barrels a day, according to OPEC. Iraq’s output last surpassed Iran’s in 1988, after the countries ended their brutal eight-year war.

Iraq isn’t finished yet, and is seeking to still double oil output by 2015. Soon Iraq will overtake Iran as OPEC’s second-largest producer as sanctions cripple crude production in Iran.

With rising oil production from Libya and Saudi Arabia, Iraq’s recovery is helping alleviate concern that a European Union blockage on Iranian oil in July will squeeze and constrict global supply. Tensions over Iran’s nuclear program and the prospect of embargos on its oil exports pushed Brent crude to a 3½ year high of $128.40 a barrel on March 1. Brent Crude Oil fell as low as $111.40 today.

 

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Lead is at a year-low currently, but poised to rise on global shortages. Demand for lead has gone up every year for the past 5 years as the metal is a crucial part of industrial batteries.

Wolrdwide stockpiles dropped 7.6% since October 2011 when lead prices reaches an all-time high. Analysts estimate that prices will rise 13% before the end of the year to about $2,273 per ton as supply struggled to meet demand.

Demand is coming largely from the industrial sector and the high-tech markets as a major component of batteries. However demand is outpacing supply by 150,000 tons per year. This gap will rise further as a major Canadian mine run by Xstrata (XTA) will close next year as its deposits are exhaused. The company will focus on new, more profitable mines.

Currently only China is developing new lead mines.