Weekly Fundamentals: Commodities Glitter as USD Tumbles

2 October 2010 2 October 2010

BonTrade

Weakness in the dollar continued to support commodities. Although several US data released last week beat expectations, speculations that the Fed will expand the bond-buying program did not abate. The dollar index plunged for a 3rd week to 78.08, down -1.65% on the week. The energy complex was the best performer of the week with crude oil and fuel prices surging 6-7%. Precious metals strengthened further with gold making new nominal highs and silver 30-year highs. Base metals continued to perform well as strong Chinese PMI signaled demand for the complex should sustain.