The bench-mark “Bloomberg Commodity Index” has been in freefall for the fifth-day in a row now, which is reportedly the biggest stretch of declines since March. Yesterday the commodity index dropped a reported 1.1% alone with the help of a strengthening dollar and the perceived agreement for higher interest-rates forthcoming..
Gold only yesterday spiraled lower to five-year lows, but not just that market – Brent crude oil, industrial metals, natural gas, and even some agricultural products have been part of this rout in commodity prices. A strong dollar means higher costs for importers commodities, while higher interest-rates make borrowing costs unattractive for anybody.
“With the Federal Reserve Chairwoman clearly signaling a hike in interest-rates soon, rather than later, it’s economics 101 for investors to sell assets and hold onto whatever gains or cash they have on hand,” said Jeff Evans, Vice-President of the Managed Accounts Division for RMB Group in Chicago, regarding the fundamental assessment of the commodity futures markets. Evans added, “The strength of the US Dollar makes lower raw materials costs a slam dunk.”
More than one-half of the markets I trade (all agricultural markets) are in down-trends, or have recently rolled over into down-trends. The few that are still “up” are all at a crossroads, so, time for traders to accept lower commodity futures prices ahead.
ALL COMMENTARY IS CONSIDERED OPINION & VIEWS FROM THE AUTHOR AND NOT A SOLICITATION OF ANY SECURITIES. THE RISK OF LOSS IN TRADING COMMODITY INTERESTS CAN BE SUBSTANTIAL. YOU SHOULD THEREFORE CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR FINANCIAL CONDITION.