Commodity markets faltered this week after an unexpected growth outlook downgrade from key consumer China, but sentiment was soothed by a successful Greek debt swap deal and upbeat US payroll data.
Monday’s announcement by Chinese Premier Wen Jiabao (溫家寶) at the opening of the National People’s Congress, that China would target 7.5 percent growth this year cast a pall over global markets.
“The commodity markets have ... been rattled by official statements made at China’s annual National People’s Congress,” Capital Economic analyst Julian Jessop said.
“However, this announcement alone should not be seen as a turning point for commodity markets. The growth target has been set at 8 percent every year since 2005, yet this has not prevented GDP from rising by an annual average of nearly 11 percent over this period,” Jessop said.
OIL: Prices sank at the start of the week after top global energy consumer China slashed its growth outlook, but finished with gains after the Greek deal and US data. The market meanwhile remains well supported by simmering geopolitical tensions over Iran.
“In our view, a military confrontation is unlikely in the middle of formal nuclear negotiations. However, if the talks are judged to be a resounding failure, war drums will likely beat louder,” Barclays Capital analyst Sudakshina Unnikrishnan said.
The prospect of new talks comes at a time of heightened tensions between Iran and its regional arch-rival Israel, and as Tehran struggles under a punishing new range of US and European EU sanctions.
This week, Brent spiked to a near four-year peak at US$128.40 a barrel — the highest level since July 23, 2008 — after reports of a pipeline fire in Saudi Arabia, which was later denied.
By late Friday on London’s Intercontinental Exchange, Brent North Sea crude for delivery in April rallied to US$125.95 from US$123.86 the previous week.
On the New York Mercantile Exchange, West Texas Intermediate (WTI) or light sweet crude for April rose to US$107.91 from US$106.51 the previous week.
PRECIOUS METALS: Prices fell across the board as investors eyed the higher US dollar and persistent worries over Greece.
A stronger dollar weighs on demand for commodities as it makes raw materials such as gold more expensive to purchase for buyers holding weaker currencies.
By late on Friday on the London Bullion Market, gold dropped to US$1,687.50 an ounce from US$1,707 the previous week.
Silver fell to US$33.87 an ounce from US$35.21.
On the London Platinum and Palladium Market, platinum decreased to US$1,655 an ounce from US$1,704.
Palladium dipped to US$690 an ounce from US$713.
BASE METALS: Base metals lost ground on the China news.
By late on Friday on the London Metal Exchange, copper for delivery in three months slid to US$8,490 a tonne from US$8,595 the previous week.
Three-month aluminum decreased to US$2,229 a tonne from US$2,340.
Three-month lead fell to US$2,159 a tonne from US$2,175.
Three-month tin dropped to US$23,000 a tonne from US$23,800.
Three-month zinc dipped to US$2,087 a tonne from US$2,113.
Three-month nickel retreated to US$19,100 a tonne from US$19,459.
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