Gold futures eased a touch in New York on Friday, despite the continuing flow of gloomy news about Greece and the eurozone, but still managed to settle above $US1,200 an ounce on Comex.
But the events in China and Greece will start exerting a greater impact this week.
At the same time oil prices weakened and lost ground as the US dollar rose a little on the safe haven effect ahead of the weekend. But commodities were a sideshow to the events surrounding Greece.
Perhaps traders would be better placed watching the rising volatility on China’s stockmarkets – after all China is the world’s biggest consumer of commodities and a financial shakeout in that country will have more direct impact on commodity prices (and the value of the US dollar) than events in the eurozone.
Gold futures notched up a gain for the week, thanks to the tensions over Greece’s debt negotiations with the EU and eurozone, and uncertainty ahead of Monday night’s emergency summit of EU leaders in Brussels.
Comex gold futures for August delivery fell 10 cents to settle at $US1,201.90 an ounce on Comex. That was a rise of 1.9%.
Comex July silver futures however shed 4.4 cents, or 0.3%, on Friday to $US16.109 an ounce, but that was still a rise of 1.8%.
In the most important move in commodity markets (excluding those moves triggered by the situation with Greece), copper futures on Comex fell 1.4% on Friday and more than 4% last week to end on $US2.569 a pound.
The continuing losses in copper tells us there’s still underlying weakness in demand for the metal from China – which is by far the biggest buyer and user of the metal in the world.
China accounts for 40% of global demand and the sluggish pace of growth has seen a sharp fall in Chinese copper imports this year, which has been reflected in the Comex price.
The stronger greenback hit oil futures prices as well on Friday to rack up a loss for the week.
Traders blamed a combination of fears of a further rise in Saudi crude output, worries about energy demand as a result of Greece’s debt problems and Iran’s nuclear program.
Traders ignored another fall in US oil rig use and a moderate drop in US oil stocks.
West Texas type US crude futures dropped 84 cents, or 1.4%, to settle at $US59.61 a barrel in New York, down 0.6%.
In London August Brent crude fell $US1.24, or 1.9%, to $US63.02 a barrel and 1.3% lower over the week.
US oil rig use fell for a 28th consecutive week, according to the weekly report from oil services group Baker Hughes.
The number of active oil drilling rigs fell 4 to 631 as of June 19 and the total number of rigs in use fell 2 to 857.
Compared to last year, the total rig count has fallen by 1,001, with the oil rig count down 914.
There are definite signs that the fall in US rig use has bottomed out – and some analysts are saying don’t be surprised if that figure starts rising slowly in coming months.
