Swine Flu Continues To Bog Down Crude Prices, Profit-taking Hurts Gold & Silver

CFDTrading

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Tuesday, 28 April 2009 21:37:12 GMT
Written by Stefan Tifigiu, CFDTrading Research

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Crude prices continued to decline as markets remained wary of the the economic impacts of the swine flu outbreaks. While the summer driving season typically provides support for crude demand, drivers avoiding travel due to the possible pandemic may offset this support. This will return focus to sharp supply and demand pressures.

Commodities - Energy


Crude Declines As Fears Continue Over Economic Impact Of Swine Flu Outbreaks


Crude Oil (WTI) $49.590 -$0.5500 -1.10%
Crude prices continued to decline as markets remained wary of the the economic impacts of the swine flu outbreaks. While the summer driving season typically provides support for crude demand, drivers avoiding travel due to the possible pandemic may offset this support. This will return focus to sharp supply and demand pressures. In terms of supply, stock piles will remain at decade highs for the medium term. Demand meanwhile, will continue to feel the effects of the steep global economic contraction. Now that even the summer driving season may be at risk, there is very little in the way of logical support for such high crude prices. Nevertheless, risk sentiment has been and will continue to be the most influential factor in crude pricing. In this regard, equity investors have shown that there remains a substantial amount of risk appetite for US equities. So long as equity markets remain undecided and provide some level of support, crude prices will continue to trade near current prices. However, barring any equity rallies, crude markets will begin to cave in to fundamentals that point sharply toward lower prices. Expect crude prices to decline in the near-term.



Commodities - Metals

Gold Pares Gains On Automatic Sell Stops


Gold $894.000 -$12.480 -1.38%

Gold prices declined today as fund sell stops were hit when prices fell below $900. Despite the decline, gold remains in position to gain. The equity markets continue to wrestle with possibility of a recovery. Now that swine-flu outbreaks present further risk to the economy, and worries mount over how well capitalized financials are to withstand expected further losses, a high level of uncertainty remains in the markets. This will likely lead to modest price gains for safe-haven metals.

Silver $12.470 -$0.5150 -3.97%

Silver prices fell along with gold today. As stated earlier, silver has many industrial applications. As a result, declines in production activity may place some downward pressure on prices. Nevertheless, any heightened risk aversion that would benefit precious metal value will still benefit silver prices. Look for modest gains in the near-term.


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