Commodities: Oil and gold remain lacklustre as base metals recover

Oil and gold futures remained broadly in the range of the previous session’s levels in European trading on Friday, as base metal futures staged a minor recovery.

At 1603 BST, the WTI front month futures contract was up 0.33% or 14 cents at $42.37 a barrel, following a 2.4% decline to a six-year low overnight. Concurrently, Brent remained within touching distance of a $50-level, down 0.85% or 42 cents at $48.80 a barrel, with oversupply issues expected to hound the market for a while yet and commodities linked currencies feeling the heat.

Kit Juckes, head of forex at Societe Generale, said the eye-catchingly weak commodity on Thursday was oil. “It's now clear to financial markets that tackling oversupply in a world with more modest demand growth, requires a more protracted undershoot in oil prices. The same could be said of the whole commodity complex.”

Precious metals market stayed suitably lacklustre with the market squaring a probable September US interest rate hike against safe haven demand in wake China’s currency devaluation.

COMEX gold for December delivery was broadly flat at $1,115.10 an ounce, while spot gold was up 0.16% or $1.75 to $1,113.35 an ounce. COMEX silver was down 0.42% or six cents to $15.34 an ounce, while spot platinum drew further away from the $1,000 an ounce shedding 0.26% or $2.55 to $990.05 an ounce.

Kelly-Ann Kearsey, dealing manager at GoldMoney, said, “While both gold and silver have been slipping in recent months, silver has perhaps fallen the most. In April 2011, it was riding high at over $48, in recent weeks it’s been at its lowest levels in five years, trading at around $15.”

“That said, all precious metals have made gains this week and we’ve seen the usual selling out of the UK and Swiss vaults, with buying going into Singapore.”

As the week’s trading drew to a close, base metal futures staged a minor recovery. Past the midway point in trading on the London Metal Exchange, three-month delivery contracts of primary aluminium (up 0.3%), copper (up 0.2%), lead (up 0.3%), nickel (up 0.2%), tin (up 2.9%) and zinc (up 0.8%) were all in positive territory.

Finally, the agricultural commodities market was largely in positive territory. CBOT corn (up 0.13%), wheat (up 1.29%), ICE cotton (up 0.99%), cocoa (broadly flat) and CME live cattle (up 0.10%) contracts stayed in the green.