Commodity markets experienced mixed fortunes this week as traders digested upbeat data from China, Europe and the US, while gold slid as investors shifted cash out of the safe-haven precious metal.
Figures from British bank HSBC showed China’s manufacturing activity this month hitting a two-year high. Also on Thursday, US jobless claims came in well below expectations, an unexpectedly strong result for the second week in a row.
In Europe, a purchasing managers index, an indicator of manufacturing and services activity, this month reached its highest level in 10 months. Added to the mix, investors digested news that German business confidence struck the highest level in seven months this month.
OIL: Brent prices struck a three-month peak on Friday on the back of a weak US dollar, upbeat German data and growing global economic optimism, but pulled lower in late afternoon deals as dealers took profits.
Brent North Sea crude hit US$113.84 per barrel — the highest level since mid-October.
“Oil is heading for the longest streak of weekly advances in nearly four years after optimism on global demand took both crude benchmarks higher,” CMC Markets analyst Matt Basi said.
“Recent German confidence figures have added to an improving picture from the US and China, with US official figures suggesting demand has increased by the most in a month last week,” he said.
By Friday on the New York Mercantile Exchange, West Texas Intermediate (WTI) or light sweet crude for delivery in March firmed to US$95.70 a barrel from US$95.38 for the February contract a week earlier.
On London’s Intercontinental Exchange, Brent North Sea crude for March jumped to US$113.17 a barrel compared with US$110.85 the previous week.
PRECIOUS METALS: Gold prices slid as investors moved cash into riskier assets and after top consumer India ramped up taxation.
“The market is losing investor confidence in an environment when global sentiment remains more or less positive,” VTB Capital analyst Andrey Kryuchenkov said.
“Bullion has now fully decoupled from the broader market, showing little reaction to upbeat preliminary January manufacturing PMIs in China ... as well as much better than expected manufacturing PMIs in the eurozone,” he said.
India, meanwhile, hiked the import duty on gold by 50 percent in an effort to reduce demand and help stem the country’s ballooning current account deficit.
By late Friday on the London Bullion Market, gold was down to US$1,660 an ounce from US$1,688.50 a week earlier.
Silver eased to US$31.56 an ounce from US$31.82.
On the London Platinum and Palladium Market, platinum firmed to US$1,678 an ounce from US$1,677. Palladium increased to US$725 an ounce from US$722.
BASE METALS: Base or industrial metals diverged in choppy trade, winning partial support from the positive economic backdrop.
“Base metals have garnered some support this week from positive economic data worldwide, dollar weakness and very low risk” appetite, BNP Paribas analyst Stephen Briggs said. “But amid choppy conditions, they have made no net progress, thus falling further behind stock markets.”
By late Friday on the London Metal Exchange, copper for delivery in three months fell to US$8,028 a tonne from US$8,122 a week earlier.
Three-month aluminum fell to US$2,049 a tonne from US$2,066, while three-month lead edged up to US$2,364 a tonne from US$2,328.
Three-month tin dropped to US$24,760 a tonne from US$25,150, three-month nickel decreased to US$17,365 a tonne from US$17,710 and three-month zinc firmed to US$2,081 a tonne from US$2,050.