Gold lead commodity ETFs higher, as agriculture, oil and natural gas gained. Gold rose yesterday with the spot price touching $1,776.80, the highest level seen since November. Silver moved higher, as well, closing at $34.28.
Agriculture ETFs moved higher as sub-sectors including corn, soybeans and wheat all showed gains. In the energy complex, West Texas Intermediate Crude jumped to levels last seen in May, 2011, while natural gas gained but remains in the arms of a long, deep bear market.
Commodity ETFs followed the markets higher:
SPDR Gold Trust ETF (GLD): up 1.1%
iShares Silver Trust ETF (SLV): +0.12%
United States Natural Gas ETF (UNG): +0.45%
United States Oil Fund (USO): +0.02%
PowerShares DB Agriculture ETF (DBA): +0.38%
Commodity prices gained strength from reports of European economic growth slowing and the possibility of more central bank intervention, while the “flight to safety” trade propelled gold higher. Oil and the energy complex was boosted by ongoing tensions with Iran as the International Atomic Energy Agency’s representatives were rebuffed in their efforts to inspect Iran’s nuclear facilities.
Iran is ranked fourth among proven oil reserves and ongoing tensions between Iran and Europe and the United States over Iran’s nuclear program have pushed the price of oil up approximately 10%, to over $106/bbl, since the beginning of February. Israel is mulling over the possibility of air strikes against Iran, while the European Union is planning an embargo against the country beginning July 1. For its part, Iran has cut off crude oil shipments to Britain and France and this ongoing conflict has put upward pressure on oil, gold and other commodities.
Bottom line: Commodities, particularly precious metals and oil, are in strong up trends, and while volatility will remain, these current trends are likely to continue.
Disclosure: Wall Street Sector Selector actively trades a wide range of exchange traded funds and positions can change at any time.
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