Commodities: Gold rides high on safe haven tag, cocoa futures rally continues

Base metals saw red on Friday, while precious metals in general and gold in particular, continued to trade higher in Europe as concerns over a possible Greek debt default saw investors flock to the precious metals market.

Additionally supported by a relatively weaker dollar and a US Federal Reserve’s dovish stance, COMEX gold for August delivery came in at $1201.90 an ounce, up 9 cents or 0.01% at 1235 BST, continuing its overnight uptick.

Spot gold was trading at $1,203.29 an ounce, up $1.35 or 0.11%, while spot platinum came in 0.46% or $4.96 higher at $1,078.71 an ounce. Finally, COMEX silver for July delivery was broadly flat at $16.14 an ounce.

Kelly-Ann Kearsey, dealing manager at bullion dealer GoldMoney, said, “The continued stalemate in Greek debt talks is causing some to look for safe haven territory. There has been the usual pattern of selling out of the UK and Switzerland, with the buying going into Singapore and Hong Kong.

“The Fed’s more dovish stance on rate rises has given some support to gold, boosting it above the $1200 threshold. Platinum interest is rising due to the precious metal languishing at the lowest prices we’ve seen since May 2009, but silver, though volatile, has still had a positive week with the gold/silver ratio remaining above 70.”

Meanwhile, base metals were trading lower on the London Metal Exchange reversing a late rally on Thursday. Three-month contracts of primary aluminium (down 6.5%), copper (down 1.5%), nickel (down 0.5%), and zinc (down 1.7%) were in the red past midway point in trading, with lead (down 16.3%) and tin (down 34.3%) seeing particularly sharp falls.

Oil benchmarks reverted to the norm after an overnight rise following on from weaker US inventory data. Profit taking, currency fluctuation and more than adequate global crude oil supplies sent the Brent front month futures contract for August delivery lower by 1.76% or $1.13 to $63.13 per barrel.

The WTI’s stay above the $60 level appeared short-lived as it tumbled to $59.63, down 92 cents or 1.52%, having reversed much of the previous session’s gains.

Finally, major agricultural commodities were in the red with CBOT corn (down 0.83%), wheat (down 0.35%), ICE cotton (down 0.51%) and CME live cattle (down 0.86%) all trading lower. However, ICE cocoa contract was trading up $5.01 or 0.15% at $3,295 per tonne.

A spokesperson for ICE futures exchange told Sharecast that open interest cocoa contract numbers currently being recorded by it were at their highest level "since the end of October 2013."

Friday’s spike has largely been attributed to a fungus which destroys the cocoa-pod, leading to supply-side concerns in Ghana. However, more broadly speaking, the rise of over 12% in the futures price since April has been attributed to increased demand from global chocolate makers.