Commodity Prices And Profits

Commodity prices and futures contracts, traded on the New York Commodities Exchange (Comex) are an agreement to buy or sell a commodity at a specific price and date. The delivery date is the day the metal is transferred from buyer to seller or that the contract is paid out.

“One of the reasons why prices tend to peak in that period is because there is a very strong seasonality to precious metals and copper prices and that seasonality grows on fabrication demand trends and investment demand trends.”

However, do not get over-excited just yet. The price could fall before it gets there, according to Christian.

“We think the price is going to fall off and move into a consolidation phase second and third quarters (2006) and then possibly rise to new peaks in December and April next year,” says Christian.

And while he talks of a price between $580/oz and $600/oz coming up, he says the eventual cyclical peak is not as clear and will be driven by investor demand rather than jewellery demand.

“Where those peaks are and how graciously the markets get to them will depend on currency market developments, stock markets, interest rates, international politics and domestic politics,” he says.

It is for gold’s safe-haven appeal that others are seeing future upside in the price. Uncertainty over what Iran is up to in its uranium enrichment programme is just one of the recent headline events leaving investors uneasy.
See how to capture profits when commodity prices rise.