Commodity prices slumped this week as confidence in the global economy was shaken by growing fears about soaring European debt and weaker-than-expected US jobs data.
“Commodity markets continue to be held hostage by volatile external markets, dollar fluctuations, shaky sentiment and changing perceptions on the health of the macro-economy,” Barclays Capital analyst Sudakshina Unnikrishnan said.
OIL: World oil prices tumbled as traders took their cue from sliding global stock markets, a stronger US dollar and mounting concerns about a potential sovereign debt default in Europe.
“The price of oil fell ... as traders continued to flee the euro and buy up the US dollar,” ODL Securities analyst Marius Paun said.
“Given the inverse relationship between the dollar and oil, this added some downside pressure but the big story remains the health of the Greek economy. Concerns over sovereign debt have pushed global equity markets lower, which in turn has dented investor confidence in terms of future demand,” Paun added.
The market had nosedived by nearly US$4 on Thursday, mirroring plunging global stock markets, as the US dollar strengthened after a surprise rise in US initial weekly jobless and a deepening debt crisis in Europe.
A stronger US unit makes dollar-priced crude oil more expensive for buyers using weaker currencies — which in turn tends to dent demand and in turn prices.
By late on Friday, New York’s main futures contract, light sweet crude for delivery in March, sank to US$72.80 a barrel from US$74.30 a week earlier.
London’s Brent North Sea crude for March fell to US$71.44 from US$72.84.
PRECIOUS METALS: The US dollar “put downside pressure on gold given the inverse relationship it has with the currency,” ODL Securities analysts said in a research note.
By Friday on the London Bullion Market, gold fell to US$1,058 an ounce from US$1,078.50 the previous week.
Silver dropped to US$15.17 an ounce from US$16.29.
On the London Platinum and Palladium Market, platinum slid to US$1,475 an ounce from US$1,512.
Palladium slipped to US$395 an ounce from US$419.
BASE METALS: Base metals prices “were thrashed again, as a surging dollar and weak US equity prices continue to weigh,” MF Global analyst Edward Meir said. “However, it is the lingering concern about how deeply and quickly China will move on tightening credit that has generated the most angst.”
By Friday on the London Metal Exchange, copper for delivery in three months dropped to US$6,335 a tonne from US$6,820 the previous week.
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