Gold had its biggest fall for the first time in nearly two months last week as investor appetite for riskier investments became the norm again.
Comex futures fell 2.3% to $1,327.40 an ounce on Friday in New York as the desire for safe haven investments evaporated in the wake of the Upper House election results in Japan which triggered a huge rally in Tokyo share prices and a sell-off of the yen.
Adding to the selling pressures was the better than expected US jobs report for June the previous Friday, and a spate of equally solid data during the week on the health of the US economy – and Friday’s retail sales rise of 0.6% last month added weight to the move back into riskier assets. The US dollar rose more than 3% against a basket of major currencies, led by falls by the yen, and also the euro. The Aussie dollar ended the week well above 76 US cents.
Comex gold futures ended at $US1,327.40 an ounce, suffering from their first weekly loss in seven, but silver finished at $US20.165 an ounce, and notched up yet its 7th weekly gain in a row with a rise of 0.3%.
The slightly better than expected Chinese second quarter and June monthly economic data on Friday saw copper add to earlier gains and the metal rose 5.4% over the week to end on $US2.234 a pound on Comex.
Cotton futures shrugged off the stronger dollar to add nearly 13% last week in the best performance of any commodity.
Cotton futures for December delivery rose 0.6% to settle at 74.28 cents a pound on in New York – its highest settlement since June 2014, and scored a weekly gain of 12.9%, according to FactSet data. And August West Texas Intermediate crude rose 27 cents, or 0.6% on Friday, to settle at $US45.95 a barrel in New York, up 1.2% for the week.
In London, September Brent crude added 24 cents, or 0.5%, to $US47.61 a barrel – up 1.8% higher for the week.
Another rise in US oil rig use had no negative impact on oil prices on the day, but the rise has gotten investors and analysts wondering when oil will break lower towards $US40 a barrel.
The weekly Baker Hughes rig use report on Friday showed the number of active US oil rigs rose by 6 to 357 last week.
That is the highest count since the week of April 1. The number of rigs in use is now up more than 15% in the past three and a half months.
Rising production has left some analysts concerned that new supply will begin to drive the oil market further out of balance, with US commercial inventories already running at the highest levels on record for this time of the year.
Oil stocks are falling, but are still at record highs, while the draw down in petrol stocks remain slower than indicated by consumption data.
The International Energy Agency says that while oil supply and demand moved closer to balance in the second quarter, there is a rising chance of a product oversupply in the next few months which could push crude prices lower and demand slows.
