LONDON, Sept 29: Commodity markets enjoyed mixed fortunes this week as traders eyed growing speculation over a full bailout of debt-plagued Spain, and amid rising doubts over the US Federal Reserve’s stimulus plan.
“Commodity prices were broadly down over the week as European debt concerns intensified, leading to choppy price action,” noted Barclays Capital analyst Sudakshina Unnikrishnan. Financial markets were rocked on Tuesday as violent protests in Madrid and a general strike in Greece spooked investors and stoked jitters over the eurozone crisis.
Spain unveiled on Friday the full cost of rescuing its troubled banks, seen by investors as one of the final steps before a looming sovereign bailout.
The nation’s stricken banks need 59.3 billion euros to fix balance sheets hammered by a 2008 property crash, an independent audit showed. It comes one day after the Spanish government unveiled a 39-billion-euro austerity budget to rein in the public deficit.
Oil: New York crude plunged close to a two-month low under $89 per barrel on eurozone woes, but prices finished the week on a mixed note. West Texas Intermediate dived to $88.95 on Wednesday, hitting the lowest level since August 3. The market has since recovered somewhat, helped by a weaker dollar, steps taken by Spain to help reduce its debt mountain, and on easing Middle East tensions, analysts said.
“Factors which contributed majorly to the price increase include brightening of sentiment on the financial markets and a weaker US dollar after Spain approved a comprehensive raft of austerity measures, which could pave the way for possible financial aid,” said Commerzbank analyst Carsten Fritsch.
The euro rose against the dollar on Friday. A weaker US currency makes dollar-denominated crude cheaper for buyers using rival currencies, pushing up demand.
Oil prices also won some support from Middle East tensions according to traders.
“Tensions between Iran and the West reinforced concerns about potential supply disruptions,” Phillip Futures said in a market commentary.
Western powers have been pressuring oil producer Iran to halt its nuclear programme but Tehran has insisted its efforts were solely for peaceful purposes. President Barack Obama vowed on Tuesday the US would not permit Iran to arm itself with nuclear weapons.
“Make no mistake. A nuclear-armed Iran is not a challenge that can be contained. It would threaten the elimination of Israel, the security of Gulf nations, and the stability of the global economy,” Obama told the UN General Assembly.
By late on Friday on London’s Intercontinental Exchange, Brent North Sea crude for delivery in November increased to $111.77 a barrel from $110.37 a week earlier.
On the New York Mercantile Exchange, West Texas Intermediate (WTI) or light sweet crude for November retreated to $91.78 a barrel, from $93.09 a week earlier.
Precious metals: Gold and silver lost ground as dealers took profits from recent multi-month peaks and tracked worries over Chinese and European demand.
“Gold and silver prices have continued to be swayed by investor sentiment and the macro environment,” said Barclays Capital analysts in a research note.
Meanwhile, the world’s top platinum producer on Thursday launched disciplinary procedures against thousands of striking miners emboldened by a big pay hike won by workers at another South African mine.
The move by Anglo American Platinum that could result in the miners being sacked was designed to put an end to weeks of production-crippling wildcat strikes. The company, known by its acronym Amplats, said less than a fifth of workers at its Rustenburg mines clocked in on Thursday, despite repeated deadlines for employees to return to work.By late on Friday on the London Bullion Market, gold dipped to $1,776 an ounce from $1,784.50 a week earlier.Silver eased to $34.65 an ounce from $34.69.
On the London Platinum and Palladium Market, platinum increased to $1,668 an ounce from $1,642.
Palladium slid to $642 an ounce from $672.
Base metals: Base or industrial metals diverged, having fallen earlier in the week on eurozone woes, but the outlook remains upbeat according to analysts.
“On balance this week we have viewed the pull backs across the metals as consolidation and have expected prices to extend gains before too long,” said William Adams at Fast Markets.
He added: “The markets are looking more upbeat on the back of the brighter economic news and following Spain’s announcement of further austerity measures, which means it may be closer to asking for help.” By late on Friday on the London Metal Exchange, copper for delivery in three months slid to $8,250 a ton from $8,283 a week earlier.
Three-month aluminium firmed to $2,123 a ton from $2,106.
Three-month lead gained to $2,300 a ton from $2,283.
Three-month tin rose to $21,700 a ton from $20,825.
Three-month nickel grew to $18,576 a ton from $18,086.
Three-month zinc eased to $2,120 a ton from $2,124.