One day’s fall doesn’t usually mean much, but last Thursday’s $US40 plunge in gold prices has worried a lot of people.
Gold’s 3.2% loss on Thursday was the biggest one day fall since February and the bout of profit taking tells us there are a lot of investors in the metal with not much patience at the moment.
Strictly speaking the uncertainty in the share and bond markets should have been good for gold, especially Wednesday when the uS dollar surprised with a big fall against the euro.
And yet the price tanked the day after and showed no sign of wanting to go much higher on Friday.
Gold and silver had ridden out the second quarter slide in commodities pretty well.
Now there are signs investors in this group are becoming as worried as those in oil and industrial metals.
Trading Thursday and Friday in commodities was a continuation of the second quarter slide and uncertainty.
Even though the US dollar turned on Wednesday and weakened again over the next two days, gold did not respond with any great certainty, as it did last year when the greenback fell.
Friday’s $US1 a share rise in the front month price on Comex was a token gesture, the fact that it happened was immaterial to the worries about being long over the holiday weekend.
Comex August gold added $1, or 0.4%, to settle at $1,207.70 an ounce in New York.
That left it down 4% for the week, the biggest fall since the week ending May 21, which was when Europe’s woes were dominating.
Silver and copper had weekly losses of around 7%, which were equally painful.
Oil lost more than 8.5% as well and closed at $US72.14.
That’s still in the narrow $US70-$US85 trading range it has barely left in nine months, another sign of just how throttled most markets are at the moment by doubts about the sustainability of current growth levels in many major economies.
In London Brent crude oil futures fell 69USc, or 0.95%, to $US71.65, the weakest close since May 25.
The weak US dollar helped take the edge of oil’s weakness after the employment numbers were released, but it was a token effort at best.
BP’s woes in the Gulf have been muted by the growing concerns about the health of manufacturing in the US and around the world.
Commodities Watch: China’s gold output rose nearly 6% year on year to 127.34 tonnes in the January to May.
China’s Ministry of Industry and Information Technology said on Friday that output totalled 28.3 tonnes in May.
Sugar: raw and white sugar prices went for a run on Friday as Russia cut import duties for August, and then the US government lifted its 2010 sugar import quota for a second time since April.
Raw sugar prices hit a 10-week high on the Russian cut which will be 15% for August.
Raw sugar prices jumped 13% in June and last week closed with a gain of 1.9%, finishing at 16.7 USc a pound in New York.
London October white sugar futures rose $US23.20, or 5%, to $US491.80 a tonne.
The United States Department of Agriculture said on Friday that the 2010 raw sugar quota would be raised by 300,000 tonnes.
The Department said overseas producers will be allowed to ship 1.731 million short tons (1.571 million metric tonnes) of sugar to the US in the year ending September 30.
That’s because domestic production of sugar (cane and beet) is not enough to meet national sweetener needs, the test the department uses to adjust quotas.
Sugar has been in very short supply in the US as supplies of corn fructose syrup have fallen because of increasing consumer and user dislike of the alterative to raw sugar.
“Additional supplies of raw cane sugar are required in the U.S. market,” the department said. “USDA will closely monitor stocks, consumption, imports and all sugar market and program variables on an ongoing bases, and may make further program adjustments,” the USDA said.
The USDA in April boosted the quota by 16% to 1.471 million short tons after retail prices surged to a record.
