Gold up, copper up, US oil down, but Brent oil up, and China’s currency moves are still exerting an influence (though easing) on markets.
While gold futures ended lower on Friday night, they still posted their largest weekly gain in nearly a month on the back of turmoil caused by China’s currency moves earlier in the week.
Comex December gold in New York lost $US2.90, or 0.3%, to settle at $US1,112.70 an ounce, reversing earlier gains in the session as the US dollar rose.
But gold posted a weekly gain of 1.7%.
Comex September silver also fell losing 19 cents, or 1.2% lower, to close at $US15.21 an ounce. But it also gained over the week, thanks to China’s currency weakening and notched up a 2.4% weekly gain.
Gold’s weakness on Friday came as the US Dollar Index (which tracks the greenback against a basket of six rival currencies), rose on renewed expectations of a September interest-rate increase by the Federal Reserve.
That was after some solid data releases on Friday for the US, including weak producer prices and a solid rise in industrial production in July.
Gold had enjoyed a bounce earlier in the week from investors nervous about China’s move to cut the yuan. Beijing guided its currency lower for three straight days amid concerns about the health of the world’s second-largest economy.
In other precious metals, platinum and palladium also rose over the week with gains of 3% or more.
And Comex copper for September delivery closed slightly lower on Friday night at $US2.351 a pound, but still gained 0.9% for the week.
Analysts at Bank of America Merrill Lynch on Friday reduced their gold price forecast by 6.8% to $US1,122 an ounce and expect the precious metal to fall below $US1,000 an ounce next year.
That didn’t help sentiment about gold, nor did news that China’s central bank has been taking advantage of weakness in the gold price to top up its holdings.
The People’s Bank of China surprised gold bugs last month, when it revealed that it had 1,658 tonnes (53.31 million fine troy ounces) in its reserves in June.
And on Friday it revealed it had added to those reserves in July as gold prices tumbled, lifting its holding to 53.93 million fine troy ounces.
The Chinese central bank has greatly increased its holdings in the last two months.
The data on its website showed that as recently as May, it had 33.89 million troy ounces of gold. But it was a different story in the oil market where new six year lows were reached during the week.
US oil futures ended Friday night slightly higher and above a near six and a half year low, but it posted a seventh consecutive weekly loss.
Escalating concerns about demand from China (and the impact of the weakening in the yuan) and continued worries about a domestic and global supply glut combined to drive prices lower and under $US43 a barrel.
Nymex West Texas Intermediate crude futures for September delivery rose 0.6%, to settle at $US42.50 a barrel after earlier falling as low as $41.35, a level seen last in March 2009. Oil lost 3.1% last week.
In London, October Brent crude futures fell 44 cents, or 0.9%, to end at $US49.19 a barrel. That left Brent up 1% over the week, ending six weeks of losses.
Oil-services firm Baker Hughes’s weekly US rig use report reported the number of oil rigs rose for a fourth straight week, moving up 2 to 672.
While the number of rigs remains down more than 900 from a year ago, the recent rise and the lack of a more pronounced fall in US oil production contineurs to put pressure on oil prices.
