Commodities: Copper gets respite, but oil and most base metals dive

Bearish sentiments appeared to be entrenched in the European metals market on Friday courtesy of a combination of factors including lower anticipated Chinese demand, lack of a stimulus from Beijing, oversupply concerns and protracted negotiations over the Greek debt crisis.

Past the midway point in trading on the London Metal Exchange, the three-month futures contracts of most base metals were down. Primary aluminium (down 0.1), lead (down 0.2), nickel (down 0.5%), tin (broadly flat) and zinc (down 0.6%) were all trading lower.

However, copper staged a mild recovery trading 0.2% or $12.25 up at $5743.75 per tonne, as LME inventories of the metal continued their recent decline, down 32 kilo tone below their early May peak with a further 2.2k drawdown in holdings.

Precious metals also continued their slide downwards with gold leading the drop. At 1410 BST, COMEX gold for August delivery was down a dollar or 0.05% at $1,171.30 an ounce. Spot gold in Dubai was down 0.21% or $2.43 to $1,170.74 an ounce, while spot platinum was down 1.10% or $11.95 at $1,073.20 an ounces. Concurrently, COMEX silver shed eight cents or 0.48% at $15.77 an ounce.

Kelly-Ann Kearsey, dealing manager at GoldMoney, said, “After gold’s rise above the psychological $1200 level last week, prices took a hit when US GDP figures showed the economy is on a stronger road to recovery than first thought. This was good news for America and the dollar; however, it hit the gold price.”

Kearsey noted that traders did engage in some profit taking before the current slip. “Of course the Greek debt situation is currently dominating minds and markets. Looking forward, if the economic news remains positive we’re likely to also see some gold purchasing as an inflation hedge.”

Away from metals, the oil benchmarks continue to trade lower, with not much on the cards to offset oversupply concerns. At 14:40 BST, the Brent front month futures contract for August delivery was trading at $62.74 per barrel, down 46 cents or 0.73% while WTI was down 1.12% or 67 cents at $59.03, as both benchmarks extended declines in Asia well into the European session.

Elsewhere, the agricultural commodities market was largely in the green. As buyers piled in, CBOT corn and wheat futures for September delivery rose 2.35% and 5.07% respectively. ICE cocoa (up 0.64%), cotton (up 1.70%) and CME live cattle (up 0.22%) were also trading marginally higher.