Sun, Apr 02, 2017 - Page 14 News List

Investors turn to metals in search of better returns

Bloomberg

Metals were one of the best investments last year and that is turning out to be true again this year.

An index of the six major metals rose for the fifth straight quarter, the longest stretch of gains since 2010.

Gold finished the quarter ended on Friday up 8.8 percent at US$1,251.20 per ounce, compared with an about 6 percent rise for global equities in the three-month period.

More money is flowing into commodities as investors search for investments that can keep up with faster inflation and metals such as copper face supply shortages.

A weaker US dollar and lower inflation-adjusted yields, also known as real yields, have made alternative assets more appealing.

“With real rates as low as they are across markets, it’s obviously very attractive to park your dollars in the commodities, which have been underperforming in recent years,” London-based S&P Global Market Intelligence head metals market analyst Sanjay Saraf said by telephone.

Palladium jumped 17 percent for the quarter, reaching the highest price since March 2015, while aluminum added 16 percent and lead rose 16 percent.

Silver advanced almost 15 percent, adding US$0.05 to close at US$18.26 per ounce on Friday. Copper slipped US$0.02 to US$2.65 per pound.

Oil capped its biggest weekly increase this year amid speculation that OPEC will extend its deal to curb output and ease a global glut.

Futures advanced 5.5 percent in New York this week, climbing back above US$50 per barrel after Kuwaiti Minister of Oil, Electricity and Water Essam al-Marzooq reiterated support for prolonging a six-month deal to trim supply past June.

The market also rose after a US government report showed that the nation’s refineries boosted crude use by the most in almost three years while fuel supplies fell.

However, prices are down about 6 percent for the first three months of this year, the biggest quarterly loss since late 2015.

Al-Marzooq’s comments have been bolstering confidence in OPEC’s commitment to drain swollen stockpiles ahead of the group’s next formal ministerial meeting in Vienna on May 25.

Optimism over the cuts had wavered recently amid a surge in US supply and production.

West Texas Intermediate for May delivery on Friday rose US$0.25, or 0.5 percent, to US$50.60 per barrel on the New York Mercantile Exchange. It was the highest close since March 7.

Total volume traded was about 19 percent below the 100-day average. Prices slipped 6.2 percent last month, the biggest slide since July last year.

Brent for May settlement, which expired on Friday, slipped US$0.13 to US$52.83 per barrel on the London-based ICE Futures Europe exchange. The contract rose 4 percent this week.

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