Oil and gold fell late last week, trimming their gains for the year so far.
A bounce in the value of the US dollar helped, as did a sharp fall in US bond yields Thursday and Friday.
Gold futures fell below $US940 an ounce on Friday, losing 2% from the greenback’s rally which prompted funds to switch money out of the commodities sector and into other investments.
The recent sharp swings in the value of the greenback against the euro, the rise in the value of sterling and the easiness of the yen, have all helped confuse commodity markets and investors.
But prices are still trending higher, especially oil which is showing few signs of cooling from its recent run.
New York gold settled down $US21.30, or 2.2%, at $US940.70 an ounce after the current, August contract hit a 3-week low of $US936.20.
Spot gold eased 1.3% to $US941.85, against $954.00 an ounce in New York on Thursday.
The dollar rose broadly, rebounding from a sell-off earlier this week, because of weak euro-zone industrial production data and a better-than-expected US consumer sentiment report on Friday. (Like ours last week).
Crude oil eased 64 US cents in New York on Friday, but still closed above $72 a barrel, ($US72.04) following solid gains earlier this week.
The weakness in oil saw other commodities sold off and the Reuters/Jefferies CRB index finished off 1.5% at the close.
But the index was up 1.7% for the week as a whole.
Oil prices were hit by profit-taking and the stronger US dollar on Friday, at the end of a week of gains that saw prices peak above $US73 a barrel on Thursday.
That compares with a price on May 1 around $US50 a barrel.
The Organisation of the Petroleum Exporting Countries said in its latest monthly report on Friday that the oil market appeared to be turning a corner amid some signs of stabilisation in the global downturn.
"In light of the considerable challenges the world economy and commodity markets, particularly the oil market, have undergone, the worst appears to be behind us."
"As the world economy stabilises, the world oil demand appears to be settling down."
Still, OPEC estimated that demand would contract by 1.62 million barrels per day (bpd) or 1.89 % in 2009 – marginally lower than its prior forecast in May for a fall of 1.57 million barrels of oil a day.
"Growth for the world economy in 2009 has been revised up slightly by 0.1% to show a decline of 1.3%. This minor change was due to upward revisions mainly in China and India, “OPEC said.
"Developments in these economies have been improving lately, justifying an upward revision for the full year.
"China’s growth forecast for 2009 was increased from 6.5% to 7.0% while India was revised up from 5.0% to 5.7%.
"The forecast for the OECD countries remains unchanged at minus 3.8% with US GDP expected to decline by 2.8%, the Euro-zone by 4.2%, and Japan remaining very weak with an expected contraction of 6.4%," OPEC said
In equities the Dow moved into positive territory for the first time in 2009 (Well behind even Australia which is up 9% or so for the year).
The S&P 500 hit a seven-month high as investors moved into healthcare and consumer durables, both defensive sectors.
That’s usually a sign investors are worried about more growth orientated stocks and after rising nearly 40% since the lows of March, those worries are not surprising and the US market has been looking tired in the past couple of weeks.
Early gains some days are eaten away by late worries, and with low volumes because of summer trading, each day sees the Dow and the rest of the market looking exhausted by the close.
Some investors are wondering if the higher oil and commodity prices might be starting to worry investors into some profit taking in sharemarkets.
Hence the noticeable switch into more defensive investments late last week.
Defensive stocks are companies that tend to weather a recession better than others because their products — such as food, toothpaste or drugs — are products consumers buy regardless of the health of the economy, although consumers will trade down from expensive and premium products, to more cheaper buys, as they are now doing even in this area of the market.
Utility stocks are looking stronger as interest rates rise, and retailers, led by Wal-Mart are attracting money, as are America’s health care and drug giants.
The Dow rose 28.34 points, or 0.32%, to 8799.26 on Friday, putting it up 0.26% for 2009 as a whole.
The index rose 0.4% for the week.
The Standard & Poor’s 500 added 1.32, or 0.14%, to 946.21, its highest close since last November. It rose 0.7% over the week.
The S&P has risen 39.8% since hitting a 12-year closing low on March 9, leading some analysts to believe a pullback is in the offing.
Nasdaq fell 0.19%, to 1,858.80 on Friday, but was up half a per cent for the week.
The Reuters/University of Michigan consumer sentiment survey for June US consumers’ confidence was at its highest in nine months, but worries about inflation, petrol prices and jobs were apparent from the various parts of the survey.
Most Asian markets ended higher and European markets ended lower on Friday night.
The MSCI Asia Pacific Index gained 1.8% to 105.17, its highest
