Commodities see mixed trading week despite upbeat data
Commodity markets experienced mixed fortunes this week as traders digested upbeat data from China, Europe and the United States, while gold slid as investors shifted cash out of the safe-haven precious metal.
Figures from British bank HSBC showed China's manufacturing activity in January hitting a two-year high.
Also on Thursday, US jobless claims came in well below expectations, an unexpectedly strong result for the second week in a row.
In Europe, a purchasing managers index, an indicator of manufacturing and services activity, in January reached its highest level in 10 months.
Added to the mix, investors digested news that German business confidence had struck the highest level in seven months in January.
Germany's ZEW investor sentiment index meanwhile soared to the highest levels since the start of the eurozone debt crisis in 2010.
OIL: Brent prices struck a three-month peak Friday on the back of the weak dollar, upbeat German data and growing global economic optimism, but pulled lower in late afternoon deals as dealers took profits.
Brent North Sea crude hit $113.84 per barrel -- the highest level since mid-October.
"Oil is heading for the longest streak of weekly advances in nearly four years after optimism on global demand took both crude benchmarks higher," said CMC Markets analyst Matt Basi.
"Recent German confidence figures have added to an improving picture from the US and China, with US official figures suggesting demand has increased by the most in a month last week."
However, the market had started the week on the back foot on worries about oversupply.
"Predictions that the market would be over supplied through much of the year saw oil prices fall at the start of the week, although news of a further cut in Saudi Arabian production saw them quickly begin to climb again," said Inenco energy analyst Joseph Conlan.
"Positive data from China helped maintain prices above $112 for much of the early part of the week.
"A rise in investor confidence in Germany fuelled the bullish sentiment in the market, coupled with news from the US that an extension to the $16.4-trillion debt ceiling had been reached, which saw further gains in the market."
The market was strengthened by the move by the House of Representatives to suspend the debt ceiling for three months, removing a major uncertainty, at least for the short term.
On Friday, the Ifo institute's closely watched business climate index for the German economy rose to 104.2 points in January -- its highest reading since June -- from 102.4 points a month earlier.
In reaction, the euro surged to $1.3479, which was the highest level since February 29, 2012.
A weak greenback tends to stimulate demand for dollar-priced crude, which becomes cheaper for buyers using stronger currencies like the euro. That tends to stimulate demand and spark higher prices.
By Friday on the New York Mercantile Exchange, West Texas Intermediate (WTI) or light sweet crude for delivery in March firmed to $95.70 a barrel from $95.38 for the February contract a week earlier.
On London's Intercontinental Exchange, Brent North Sea crude for March jumped to $113.17 a barrel compared with $110.85 the previous week.
PRECIOUS METALS: Gold prices slid as investors moved cash into riskier assets and after top consumer India ramped up taxation.
"The market is losing investor confidence in an environment when global sentiment remains more or less positive," said VTB Capital analyst Andrey Kryuchenkov at VTB Capital.
"Bullion has now fully decoupled from the broader market, showing little reaction to upbeat preliminary January manufacturing PMIs in China ... as well as much better than expected manufacturing PMIs in the eurozone."
India meanwhile hiked the import duty on gold by 50 percent in an effort to reduce demand and help stem the country's ballooning current account deficit.
Gold purchases are one of the biggest contributors to India's current account deficit -- the broadest measure of trade -- which hit a record $22.3 billion, or 5.4 percent of GDP, in the July-September quarter, as imports outpaced exports.
The government said the rise in the import duty on gold to six percent from four percent would take effect immediately. Last year it doubled the duty on gold to four percent.
India has long been the world's biggest buyer of gold -- representing about one quarter of global consumption -- with purchases strongest during religious festivals and wedding seasons.
By late Friday on the London Bullion Market, gold slid to $1,660 an ounce from $1,688.50 a week earlier.
Silver eased to $31.56 an ounce from $31.82.
On the London Platinum and Palladium Market, platinum firmed to $1,678 an ounce from $1,677.
Palladium increased to $725 an ounce from $722.
BASE METALS: Base or industrial metals diverged in choppy trade, winning partial support from the positive economic backdrop.
"Base metals have garnered some support this week from positive economic data worldwide, dollar weakness and very low risk" appetite, said BNP Paribas analyst Stephen Briggs.
"But amid choppy conditions, they have made no net progress, thus falling further behind stock markets."
By late Friday on the London Metal Exchange, copper for delivery in three months fell to $8,028 a tonne from $8,122 a week earlier.
Three-month aluminium slipped to $2,049 a tonne from $2,066.
Three-month lead edged up to $2,364 a tonne from $2,328.
Three-month tin dropped to $24,760 a tonne from $25,150.
Three-month nickel decreased to $17,365 a tonne from $17,710.
Three-month zinc firmed to $2,081 a tonne from $2,050.
COCOA: Cocoa futures retreated as investors took profits after two weeks of gains.
By Friday on LIFFE, London's futures exchange, cocoa for delivery in March dipped to £1,440 a tonne from £1,488 a week earlier.
On New York's NYBOT-ICE exchange, cocoa for March decreased to $2,205 a tonne from $2,293 a week earlier.
COFFEE: Coffee prices lost ground amid signs of plentiful supplies.
"Positive supply prospects are also weighing on prices on the coffee market," said analyst Carsten Fritsch at Commerzbank.
"According to exporters, Columbia is likely to export 18 percent more coffee this year.
"What is more, the coffee trees in Brazil are benefiting from the good weather and plenty of moisture. That said, a number of Central American countries had reported problems with fungal attack in the previous week."
By Friday on NYBOT-ICE, Arabica for delivery in March declined to 148.10 US cents a pound from 155.90 US cents a week earlier.
On LIFFE, Robusta for March delivery slid to $1,945 a tonne from $1,975 a week earlier.
SUGAR: Prices fell further, hitting their lowest points since summer 2010, as sentiment was hit by expectations of abundant supplies.
"Demand is there, but not in big amounts as most buyers are not worried about prices," said analyst Jack Scoville at Price Futures Group.
"Most statistical organisations continue to look for a big surplus production for the year.
"Production has been strong in Brazil so far this year, and reports say that the new crop production looks to be strong as well."
By Friday on LIFFE, the price of a tonne of white sugar for delivery in March decreased to $486.70 from $498 a week earlier.
On NYBOT-ICE, the price of unrefined sugar for March fell to 18.39 US cents a pound from 18.56 cents the previous week.
RUBBER: Prices inched higher despite the sharp fall on the Tokyo Commodity Exchange and Singapore Rubber Futures Exchange.
The Malaysian Rubber Board's benchmark SMR20 ended the week at 303.25 US cents a kilo, up slightly from 302.85 cents the previous week.
© 2013 AFP