Commodity Online
Barclays has said in a report that gold may continue to struggle, at least in the short term and gold failed to benefit at all as a hedge of fiscal cliff risks in late 2012 while suffering more than most other commodities in the about-turn that greeted the FOMC minutes.

Meanwhile, the steep end-year decline in ETP buying (one of the few bright spots for gold earlier in 2012) has worsened in early 2013 with a net 10t of liquidation so far.

Asian demand, sluggish last year, has shown little improvement and tellingly even recent dollar weakness is supporting gold less than usual.

With the tide likely to turn this year in terms of central bank infusions of liquidity, the debate about whether 2013 will mark the end of gold’s 12-year bull market is likely to intensify.

Meanwhile, China’s recovery will differ widely in its impact on different commodities, the Bank said.

Early data on business sentiment, trade and availability of financing have all beaten expectations, confirming that the economy is expanding modestly.

However this week’s preliminary trade data for December showed a big gap between China’s imports of copper, which fell sharply, and its imports of crude oil, iron ore and soybeans, which all rose.

In recent years, copper has become the commodity most influenced by China’s growth cycle, but this year that link looks like loosening, primarily because copper has lagged behind the de-stocking process that has helped demand for many other commodities to recover.

Indeed Barclays estimates that the copper held in bonded and exchange warehouses has risen to around 1m tonnes, a total that now exceeds half of all reported inventories, for the first time ever.