Gold loses pep as US budget deadlock-end seen

NEW YORK (Oct 13) News from Washington that a temporary deal to avoid a technical default may be reached failed to trigger much of a reaction in commodity markets with the market having refused to even consider a failure. On that basis commodity traders were already expecting a resolution resulting in some additional pressure on precious metals. Copper moved to the lower end of its current range as long- term price projections were lowered while the energy sector was the best-performing sector for a second week led by natural gas and gasoline.

The energy sector was mixed with colder-than-normal weather lending support to natural gas prices as increase demand from power plants helped trigger a healthy rally. Seasonally the month of October has shown higher prices over the past five years and this year looks no exception. Demand for gas will pick up as we head towards the US winter and inventories will begin their annual decline from December to February.

As usual the speed of this decline will help determine the price during this time. Near-term with several weeks of net injection still expected, further price advances will depend on weather, developments and demand from industry. We are looking for some resistance at the 200-day moving average on the November gas contract at USD 3.87 per therm.