Many commodities faced a fierce sell-off earlier this week, rooted in demand fears arising from China’s slowdown, but later rebounded in line with equities after surprisingly strong US growth data.
World stock markets were hammered on Black Monday — with Shanghai collapsing by almost 8.5 percent — as risk-averse investors dumped shares and many commodities over panic that the flagging Chinese economy could spark a new world recession.
Crude oil dived to 6.5-year lows but finished the week in positive territory after a Chinese rate cut and solid US GDP numbers.
Base or industrial metals were among the hardest hit, with aluminium and copper striking six-year lows on China demand fears, while lead and zinc also suffered.
The Bloomberg Commodity Index of 22 raw materials tumbled to a 16-year-low, with many markets plagued also by oversupply and rising production.
Sentiment was boosted on Thursday by easing China worries and upbeat US growth data, and after one of the most senior US Federal Reserve officials said that recent China turmoil had weakened the case for a rate hike next month.
Investors remain fearful that the Asian powerhouse’s slowdown could ravage demand for raw materials, which have fed its astonishing growth in recent years.
OIL: Prices on Monday collapsed to levels last seen during the global financial crisis, with Brent and WTI sinking to US$42.23 and US$37.75 respectively.
Prices then held close to six-and-a-half-year lows on fears about slowing economic growth and faltering demand from top energy consumer China.
Sentiment was soothed by Tuesday’s interest rate cut from the People’s Bank of China.
Both oil contracts then soared 10 percent Thursday after news the US economy — the world’s biggest, followed by No. 2 China — grew at an annual rate of 3.7 percent in the second quarter or April-June period, after 0.6 percent in the first quarter.
Investors were also buoyed by strong data on US durable manufactured goods and crude inventories.
By Friday on London’s Intercontinental Exchange, Brent North Sea crude for delivery in October rallied to US$47.20 a barrel from US$45.91 a week earlier.
On the New York Mercantile Exchange, West Texas Intermediate or light sweet crude for October gained to US$42.03 a barrel from US$40.91.
PRECIOUS METALS: Gold scored a seven-week pinnacle at US$1,170.34 per ounce on Monday as investors sought safety in the traditional safe haven.
The struggling greenback made US dollar-priced gold cheaper for investors holding stronger currencies, thereby stimulating demand and boosting prices.
However, gold fell back toward the end of the week, weighed down as the dollar advanced on solid US GDP data.
By Friday on the London Bullion Market, the price of gold declined to US$1,135 an ounce from US$1,156.50 a week earlier.
Silver eased to US$14.44 an ounce from US$15.46.
On the London Platinum and Palladium Market, platinum decreased to US$1,003 an ounce from US$1,028.
Palladium slid to US$573 an ounce from US$610.
BASE METALS: Copper on Monday tumbled to US$4,855 per tonne — the lowest point since July 2009. There was also a six-year low for aluminum at US$1,506 a tonne, last witnessed in June of the same year.
In addition, lead on Monday sank to US$1,618.50 a tonne, reaching a nadir last touched in June 2010, while zinc hit a similar low on Wednesday at US$1,673.
Some base metals pulled back into gains toward the end of the week.
By Friday on the London Metal Exchange, copper for delivery in three months firmed to US$5,086.50 a tonne from US$5,043 a week earlier.
Three-month aluminum rose to US$1,569.50 a tonne from US$1,556.
Three-month lead dipped to US$1,687.50 a tonne from US$1,701.
Three-month tin slid to US$14,125 a tonne from US$14,900.
Three-month nickel decreased to US$9,955 a tonne from US$10,125.
Three-month zinc increased to US$1,804 a tonne from US$1,773.50.
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