October 2012- A forgettable month for Commodities!!!

We are in the verge of welcoming a new month with new days and new hopes. October remained a month which all commodity markets would like to forget as the falling prices of both energy and metals drove the market to the biggest monthly loss, remaining behind everything-stocks, bonds and dollar, since May. Taking figures into consideration, the S & P GSCI Total Return Index came down by 4.1 percent, the MSCI All-Country World Index of stocks fell by 0.6 percent, and the US Dollar Index fell by 0.02 percent.

China is an emerging nation and has established itself as the biggest user of many commodities, thus any small change in the Chinese economy ultimately affects the overall commodity market. It is a current well known fact that the Chinese economy is slowing down and on the other side, the market is also slowing down. Greece is still trying to overcome her crunch situation and Spain also has been suffering from the record-high unemployment. US economy has shown a growth rate of mere 2%, which sounds really frustrating. On the whole, the global economy is showing the downtrend.

The third round of so called Quantitative Easing is also not favoring the market. QE3 was basically to purchase mortgage-backed bonds amounting to $40 billion. But then, it actually seemed helping the financial monetary instruments but did not strike the commodities. As a result, S & P GSCI fell, Gold slipped by 3.1%, its first decline in 5 months; Nickel and Zinc showing a fall by 12% and 11% respectively.

The current election outlook has also affected the market as both the nominated candidates have different and contradictory plans for investment, tax barriers and domain and employment strategies. Things have to some extent come to a hold due to the election outlook. The fixed-income securities sometimes deviated the investors but the overall failure status of their too frustrated the investors. Similarly, as mentioned above, dollar could not establish itself stronger among its highest 6 business partners, thus Dollar Index also falling.

November has been anticipated with a nice comeback as it is how the business cycle works making crests and troughs.