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Iron Ore Drops, Gold Recovers Ground

The local market will open weaker today after a fall in the ASX futures market on Friday night and one factor investors will be watching will be a sharp fall Friday and last week in Chinese iron ore prices, the most important commodity price for Australian investors.

In fact Metal Bulletin iron ore index prices moved sharply on Friday for a third day in a row.

Despite gains in the Chinese steel and futures markets, the Metal Bulletin ore price dropped $US2.44 a tonne, or 3.6% to $US63.94 on Friday from the previous day.

That was after a big rise on Thursday and a big fall on Wednesday.

Friday’s close was also down sharply from the $US66.92 a tonne the week before, a fall of 4.4%, one of the largest weekly falls for several months.

Elsewhere, Comex gold rose last week thanks to Thursday’s jump after President Trump called off his summit with North Korea.

Friday saw a small dip thanks to the stronger US dollar on Friday, but the Comex futures price stayed just above the key $US1,300-an-ounce level by the close.

June gold fell by 70 cents, or less than 0.1%, to settle at $US1,303.70 an ounce, which left it up 1% for the week.

The settlement above $US1,300 “may indicate the worst of the selling is over,” Mark O’Byrne, research director at GoldCore told Marketwatch.com.

“Despite the short term technical risks, the medium and long term outlook remains bullish. Elevated geopolitical risk should see safe haven demand remain robust,” he predicted.

On Friday, a senior North Korean official said leader Kim Jong Un is still willing to meet and later the same day there was a similar tweet from President Trump, so the summit could be back on.

The US Dollar Index rose 0.5% to 94.22 after briefly touching a new high for the year in trading.

The close left the greenback up around 0.5%, while the Aussie dollar ended around 76.40 US cents in New York, up around a third of a cent over the week.

US bond yields were easier and the 10 year security saw its yield dip to around 2.928%, a long way from the 2.99% day’s high earlier in the session and the 3.1% seven year peak a week or so ago that worried investors.

In fact the yield fell 16 basis points last week without too much fuss.

In other trading, Comex July silver slipped 0.8% to $US16.546 an ounce, for a weekly gain of around 0.6%.

July copper ended at $US3.078 a pound, down 0.6% for the session, but up 0.5% for the week.

Meanwhile London Metal Exchange (LME) closes saw lead fall on Friday as investors took profits after a surge that produced the biggest weekly rise since last September - 4.5%.

Three-month LME lead ended down 2.2% on Friday at $US2,438 a tonne, having hit its highest since late February on Thursdayoft $US2,509.

LME aluminium ended the day down 0.7% at $US2,263 a tonne after Russian tycoon Oleg Deripaska stepped down as a director of aluminium producer Rusal as part of a move to try and lessen the blow of US sanctions on the company which is the world’s second largest aluminium producer.

LME three month copper finished up 0.1% at $US6,885 a tonne, tin closed 1.3% lower at $US20,150 a tonne, while zinc rose 0.5% at $3,050 and nickel lost 0.8% at $14,780.

View More Articles By Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

At the AFR he was a finance writer, Finance Editor, News Editor and Chief of Staff. At the Nine Network he was supervising producer of Business Sunday for more than 16 years. He has also written for other online and analogue print publications here and overseas.



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