After rallying nearly $US100 in two months, gold gave up some of those gains last week, taking many investors in the metal by surprise
Gold briefly dropped below $US1,100 an ounce on Friday, ending the week $US30 weaker as investors unwound positions.
That was despite a weak end to the day for the US dollar. Oil also resisted the greenback’s weakness.
It seems jitters about the still firm value of the US dollar are starting to impact short-term sentiment.
Speculation about further monetary tightening by China and sovereign debt worries out of Europe prompted heavy futures liquidation last week.
But worries about Greece might be about to ease for the time being with reports of some sort of eurozone agreement to support the country’s debt.
And the re-emergence of a more confident tone last week in major stockmarkets also pushed some traders out of gold and back into equities.
Spot gold finished around $US1,101.60 an ounce in late New York trading Friday, down from the $US1,109.30 late in on Thursday.
Comex April gold futures settled down $US6.50 at $US1,101.70 an ounce.
After rising almost $US20 the week before, gold was sold off last week as major sharemarkets strengthened and the surge in Chinese inflation took the market by surprise and brought fears of a rate rise.
Speculators had been increasing their net long position in gold for four straight weeks (up 14% in four weeks), but there were signs of a sell off Thursday and Friday.
That could have been behind the biggest weekly loss in seven weeks for the metal.
Gold lost 3% in value last week, the biggest fall since late January.
Gold’s all time high was $US1,227.50 an ounce on December 3 last year.
Not helping was the better tone to official economic figures coming out of the US (retail sales up in February, instead of the expected fall) and a surge in industrial production in Europe in January (and December’s big drop was revised to a solid rise).
Weak consumer US confidence figures had some impact-on oil and equities for example-but not gold.
The Fed’s meeting this week is not expected to produce any significant changes in current US monetary policy.
China though remains the worry with a rate rise expected there in the next few months.
Comex May silver futures fell 11.2 cents, or 0.7%, to $US17.048 an ounce, 1.9% for the week.
Oil futures fell Friday after the weak US consumer confidence data, but sugar prices managed a small recovery after their pounding earlier in the week.
Nymex April West Texas Intermediate lost 87c at $US81.24 a barrel, down half a per cent, while ICE April Brent lost 89c at $US79.39 a barrel, down 0.7% this week.
The fall came despite the International Energy Agency revising up its global demand forecasts for both last year and 2010 by 70,000 barrels a day.
The IEA now expects global oil demand to reach 86.6m b/d this year, an increase of 1.8% or 1.6m b/d versus 2009.
Global demand in 2009 was revised up to 85.0m b/d, a fall of 1.4%, or 1.2m b/d, compared with the previous year.
The IEA said Asia alone would provide more than half of global oil demand growth this year with China accounting for almost two-thirds of that increased demand from the region.
The IEA warned that demand for oil, a strong indicator of economic activity, would not recover in advanced economies overall this year, but projected an "astonishing" growth trend of 28 in China.
Wheat rose Friday in Chicago for the first time in four days after the US dollar weakened.
May wheat futures On the Chicago Board of Trade rose 6.5c, or 1.4%, to $US4.8525 a bushel.
The grain fell 1.7% last week, after falling 5% the previous week. It’s down 10% so far this year.
Not even news that up to 13% of the Ukraine’s winter grain crop was damaged by cold weather could boost sentiment.
A big influence last week was the estimate from the US Department of Agriculture (USDA) that America’s domestic inventories could hit their highest level in 22 years.
The Department’s latest grain forecast said wheat stocks in the US will rise to 1.001 billion bushels (27.2 million tonnes) in the 12 months ending May 31, the most since 1988.
Sugar’s small recovery on Friday saw it finish up 0.4 of a cent at 19.67 US cents.
That was welcome relief for the sell off earlier in the week after another report suggesting an improving outlook for India’s production this season.
India is the world’s second-largest sugar producer and biggest global consumer so changes in its supply and demand needs drive the global sugar market.
Both India and Pakistan postponed buying tenders last week, which led to more weakness on prices.
Over the week, raw sugar fell 11.8%, while white sugar dropped 11%. It is the worst performing commodity this year and is off around 30%.
Copper fell 0.7% in London to $US7,490 a tonne which Chinese buyers all but absent from the market.
The copper market ignored news of another big aftershock in Chile on Thursday.
China’s copper imports rose 10% in February from January, despite the Lunar New Year holiday.
Imports of copper and products totalled 322,282 tonnes.
That’s still down 2% on a year ago. Copper prices have risen 15% in the past month.
