Today saw yet another day of frustration in the equity market as the Dow Jones Industrial Average suffered its worst week in roughly a year. The day also saw Barack Obama issue a statement urging Congress to set aside their differences and to pass a bill in order to prevent a catastrophic default from hitting bond markets around the world. However, this plea did little to help boost investor confidence as the S&P 500 finished below 1,300 points to close Friday trading. With just days left before we reach our the final debt ceiling deadline, rumors of a U.S. downgrade have been circulating, and seem to be gaining momentum as the days go on. No matter what decision is made in Congress, it will have a significant impact on our economy, and investors can only wait in limbo until something is put into place.
The commodity world saw a mixed day, with the majority of futures contracts suffering a rough session as a fair amount of currencies were lifted due to yet another day of uncertainty from the U.S. government. Crude oil tanked to finish below $96 per barrel while its precious metal counterparts welcomed safe haven investments from those seeking to get their assets out of equities in a hurry. Below, we outline two of the most notable commodity performances of the day:
One of the biggest commodity winners was gold, who saw strong gains amid yet another day of congress debates that are seemingly leading nowhere. While the current bill is working its way through the House, many expect it to be DOA upon making it to the mostly-Democrat Senate, bringing us back to square one. While equities are being saddled with the worsening debt crisis, gold is continuing to shine, as the precious metal has continually broken historical highs through out the week. Gold’s performance will be especially under scrutiny come Tuesday, when the deadline strikes and a final decision has to be made in order to avoid catastrophe. Overall, gold futures jumped 0.80% on the day finishing just under the $1,630/oz. mark [see also The Ultimate Guide To Gold Investing].
On the other side of things, natural gas was one of the worst performing futures on the day, as a new discovery led to major pressure on contract prices. While natural gas would normally be enjoying decent numbers based on the current heatwaves through out the Midwest, Chesapeake Energy announced a major find of natural gas shale that spans more than 1 million acres in rural Ohio. The shale deposit is estimated to be worth as much as $20 billion, and will add a large amount of supply to natural gas markets. As such, natural gas futures were shocked into losses of 2.2% on the day as the jump in supply was not met with a jump in demand sending prices close to the $4.1 level [see also The Ultimate Guide To Natural Gas Investing].
Disclosure: Charts courtesy of Barchart. No positions at time of writing.