Commodities: Precious metals drop after weak PMIs

Precious metal prices fell on Friday after weaker-than-expected manufacturing data.

On the Comex gold prices dropped 0.52% and silver fell 0.39% while spot platinum declined 1.18%.

Markit’s flash UK manufacturing purchasing managers’ index (PMI) came in at 49.1 in July from 52.1 the month before, falling short of economists’ expectations for a reading of 50. This was the lowest level since February 2013.

"As the impact from the referendum result sets in, and already elevated levels of uncertainty spiral higher on a lack of clarity regarding the UK’s post-exit relationship with the EU and the rest of the world in the near term, confidence levels are likely to fall further in our view," said Barclays Research.

Markit’s flash Eurozone composite manufacturing PMI nudged down to 51.9 in July from 52.8 the previous month. This marked a two-month low and was a touch below the expected reading of 52.0.

On the upside, Markit’s US manufacturing PMI rose to 52.9 in July from 51.3 in June, beating forecasts of 51.5.

Base metals were mixed on the London Metal Exchange with three-month future prices on aluminium up 0.1%, copper flat, nickel down 0.1%, lead down 0.3%, tin down 0.1% and zinc up 0.2%.

Meanwhile, oil prices declined as concerns about the global supply glut continued to weigh. Exports from southern Iraq in the first 21 days of July have averaged 3.28 million barrels per day (bpd), up from 3.18 million bpd in June, according to data from Reuters.

Separately, a report by BMI Research on Friday said demand for fuel continues to wane in key Asian markets.

"Tight margins, ample supplies and brimming stockpiles at key diesel storage hubs suggest that a pullback in diesel output is imminent," the report said.

Brent crude dipped 0.56% to $45.94 per barrel and West Texas Intermediate slid 0.60% to $44.48 per barrel at 1446 BST.