As with other asset classes, the US GDP data today is taking focus in the commodity market, with volumes seen relatively light as traders hold back from taking positions prior to the number. Some strength in the dollar has been keeping the pressure on the complex ahead of next weeks quantitative easing (QE) announcement from the Fed, with some risk aversion filtering through form the equity arena after a series of weak results from single name benchmarks in Asia overnight. The moves are leading gold to continue its sideways trade seen over the last few sessions, as some sell pressure begins to come through from funds; with the world’s largest gold ETF, SPDR Gold Shares, yesterday reporting a net liquidation of 5 tonnes from their holding. Physical demand is still seen coming from India however, ahead of Diwali and the upcoming wedding season. On the financial side however, the World Gold Council (WGC) has reported investment demand has fallen across the board in the third quarter, most likely due to the sky rocketing gold price during that period. They did report that physical demand from Europe and the US, in terms of gold coins and bars, was relatively robust in that period at around 50 tonnes, although this is still lower than that of the previous quarter. On the technical front the 21-day moving average, today at $1,344/oz, has continued to offer overhead resistance, with a failure to have a clean break and close above this level showing that price actions is still in the hands of the bears. Yesterdays fairly strong rally did begin to push 10-day momentum off its downtrend lows, although the daily stochastics are still reflecting a weaker outlook for the spot price in the immediate future. In the agricultural sector, the International Grains Council (IGC) has lowered its estimate for global corn production for the crop year 2010/11, by 10 million to 814 million tonnes; mainly due to the lower crop forecast in the US. In addition, expected global corn consumption for the year was raised by 3 million, to a record 840 million tonnes. This now paints a picture of a forthcoming supply tightening and the resulting deficit is already seen impacting global corn stock holds, which are down by 27 million to a four year low of 125 million tonnes – a supply that covers less than eight weeks. Sugar is set to test new highs in coming sessions, after yesterday’s run to within just one cent of a 30-year high, with the fundamental picture set to underpin prices as sugar inventories remain at a 20-year low. In the energy complex, yesterday’s US Department of Energy (DoE) weekly natural gas inventory data, published by the Energy Information Administration (EIA), showed a 71 billion cubic feet (Bcf) net addition, although this did not stop the front contract rallying 18% in floor trade – most of which was due to the rolling of positions ahead of the contract expiry, resulting in a 14% step-up from the Nov10 to the Dec10 contract after the close. WTI Nymex crude meanwhile has been more rangebound the past few sessions, hovering between $80 and $82/bbl for the most part, again with traders cautious ahead of any Fed QE move and subsequent dollar direction next week. The negative earnings results and underperformance of the Asian equity markets overnight, has been impacting base metals particularly today, with the Asian markets key to demand across the complex – zinc and lead leading losses, down around 3% a piece.

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