Gold benefits from demand as a safe investment: The Commodities Feed.

The general worries in the market are causing predictable effects. Assets that carry a risk, such as most of the commodities, are experiencing a decline in their value. However, gold is profiting due to an increase in demand for safe investments. The upcoming FOMC meeting has significance in determining the future of the market.

Yesterday's oil market experienced volatile price fluctuations due to broader market concerns regarding developments in the banking industry. ICE Brent initially dropped to under US$70/bbl, but eventually settled more than 1.1% higher. In the recent days, timespreads have weakened along with a general flat price weakness. The immediate ICE Brent spread dropped from over US$0.60/bbl to around US$0.20/bbl, and the forward curve has also experienced weakness. The flattening of the curve indicates a decreased concern for tightness in the physical market, which can be attributed to the better than expected supply from Russia and concerns about demand.

Gas prices in Europe faced further downward pressure yesterday. The TTF index recorded a drop of over 8% in one day, with the price settling below EUR40/MWh. This is the lowest level seen since July 2021. Recent injections have begun to increase storage levels across the EU, which are now at about 56% capacity. With the heating season ending in less than two weeks, it is anticipated that storage levels will remain above 50%. It remains to be seen how domestic consumption will adapt to the lower price environment. For instance, German gas consumption in week 10 of this year was only down 3% from the average recorded between 2018 and 2021.

Yesterday, the value of spot gold reached $2,000/oz momentarily, marking the first time since March 2022. This rise is attributed to demand driven by fears about the condition of the global banking industry. Moreover, holdings of gold ETFs grew by more than 700koz last week and now amount to 92.52moz. The outcome of Wednesday's FOMC meeting is crucial, not just for gold but for the broader markets too. In light of current market developments, it is unclear what the Fed may do, but if they halt hikes this could potentially drive gold prices up further.

In February, the International Aluminium Association (IAI) reported that the average daily global production of aluminium increased to 188,300 tonnes. This was a slight increase from January's production level of 187,800 tonnes and represented a 2.67% rise from the previous year. Overall production figures for the month totaled 5.27 million tonnes. Despite this positive outlook, aluminium production in Western and Central Europe is struggling, experiencing a decline of 9.1% from the previous month and a long-term drop of 10.8% compared to last year. In contrast, China's aluminium industry is still growing, with its estimated daily production output reaching 111,000 tonnes - a modest 0.35% increase from the previous month.

According to the USDA's report on weekly export inspections for the week that ended on March 16th, the demand for US grains remains steady. In comparison to the previous week, corn export inspections rose from 1015.2kt to 1,188.7kt. However, this number was lower than the 1,496.8kt that was reported last year. This week's soybean inspections rose to 716.6kt, up from 633.4kt a week ago and 556.6kt a year ago. Lastly, US wheat export inspections were at 374.2kt which is higher than the 256.9kt seen in the previous week and 335.1kt last year.

According to recent information released by the Uganda Coffee Development Authority, Uganda exported 478,646 bags of coffee in February which is an increase of 6.3% from last year. Exporters sold off stockpiles as prices for coffee globally remained high. The majority of coffee exports were of the Robusta variety, making up 78% of the total. Despite this positive development, coffee exports for the season have still decreased by 4.5% from last year, with a total of 2.29m bags exported thus far.

The European Commission's crop-monitoring report for the month has updated its estimate of total wheat yield for the 2022/23 season to 5.77t/ha, which is higher than last year's 5.57t/ha and the 5-year average of 5.59t/ha. The report also noted that the winter crops are in decent condition throughout Europe, following a mild winter. Despite this, there are concerns that some regions in the south may face issues due to expanding dry conditions.