Commodity prices diverged this week as traders largely reacted to the US government shutdown and its likely impact on the global economy.
OIL: Crude futures gained over the week as the US dollar weakened heavily, in particular against the euro.
"Oil prices have held up relatively well in the last days against a background of the ongoing budget dispute in the USA, the easing of geopolitical risks and a marked increase in US crude oil stocks,”Commerzbank analyst Carsten Fritsch said.
This was to a large extent owing to a falling US dollar which makes crude priced in the US currency cheaper for buyers holding rival currencies, pushing up demand.
Oil won additional support on Friday as firms began shutting oil and gas facilities in the Gulf of Mexico owing to Tropical Storm Karen.
Crude futures had begun the week by striking multimonth low points on Monday ahead of the US shutdown. However, they recovered mid-week as news that TransCanada’s southern leg of its Keystone pipeline was near completion offset official data showing a larger-than-expected jump in US crude stockpiles.
By Friday on London’s Intercontinental Exchange, Brent North Sea crude for delivery in November climbed to US$109.06 a barrel from US$108.49 a week earlier.
On the New York Mercantile Exchange, West Texas Intermediate or light sweet crude for November gained to US$103.53 a barrel from US$102.87 a week earlier.
PRECIOUS METALS: Gold prices hit two-month lows on US budget concerns before clawing back losses thanks to a weaker US dollar.
Gold futures on Wednesday struck US$1,277.15 an ounce — the lowest point since Aug. 7.
“Gold has largely pared the losses of midweek,” Commerzbank analysts said in a note to clients.
“Support is being provided by a weaker US dollar, due on the one hand to the budget dispute, and on the other hand to weaker US economic data. These two factors are making a prompt scaling back of bond purchases by the Fed less likely,” they said.
The US Federal Reserve last month decided against scaling down its US$85 billion a month bond-buying spree.
By late Friday on the London Bullion Market, the price of gold dropped to US$1,309.75 an ounce from US$1,341 a week earlier.
Silver edged up to US$21.65 an ounce from US$21.61.
On the London Platinum and Palladium Market, platinum slid to US$1,386 an ounce from US$1,416.
Palladium declined to US$706 an ounce from US$725.
BASE METALS: Base or industrial metals retreated.
"The market turned increasingly nervous in front of the US shutdown and whether the debt ceiling would be raised on time to avoid a default situation,” broker Triland Metals said in a note.
By Friday on the London Metal Exchange, copper for delivery in three months fell to US$7,190.50 a tonne from US$7,287.25 a week earlier.
Three-month aluminum declined to US$1,821.50 a tonne from US$1,835.25, three-month lead fell to US$2,055.50 a tonne from US$2,111 and three-month tin slid to US$22,900 a tonne from US$23,430.