The Week In Hindsight, 10 January 2014
Alcoa provided an early indication of what may be in store for other global miners this month after reporting a near record write down on assets due to weak aluminium prices. The company also issued cautious guidance on its outlook for metals prices over the coming year.
The Alcoa revelations could be the beginning of a last clear out from the closet for metals producers ahead of what could arrive to be a year of salvation for them.
Should global confidence remain strong and Chinese growth stable, producers of some metals will likely have the chance to break out from a period of decline in both share prices and earnings.
Gold also attempted a rebound this week, supported by mixed feelings over US data. The metal further reversed previous losses by rising back toward the $1250 level.
Despite the retracement to the upside the outlook for metal remains bearish, particularly given expectations that the Federal Reserve will go ahead with its planned taper this month. As the pace of tapering increases and the global economy continues to improve, downward pressure upon gold would be expected to mount.
Both Brent and WTI Crude declined over the course of the week following a month of gains