A stronger US dollar hit commodity prices late last week.
Comex gold futures eked out a tiny gain on Friday to halt a third consecutive daily fall, but the rise for the day wasn’t enough to avoid the first back-to-back weekly declines since the COVID-19 pandemic began in March.
Analysts say the stronger made investors trim commodity buying while they look for a clear trend in the value of the greenback.
The dollar rose 0.5% on Friday, for a weekly rise of around 0.2% against a basket of major currencies.
The US dollar has been weakening since mid-year but steadied amid indications last week from the US Federal Reserve that the central bank isn’t yet willing to implement unconventional strategies to hold interest rates lower for longer amid the COVID-19 pandemic.
Yields on 10 year Treasury bonds rose more than 6 points to just over 0.63% on Friday – three weeks ago it was close to a record low of around 0.54%.
December gold picked up 50 cents, or less than 0.1%, to settle at $US1,947 an ounce for a tiny weekly fall of 0.1%. The fall was gold’s second straight weekly decline since the fortnight ending March 20.
Comex December silver prices the most-active contract, fell 42.4 cents, or 1.5%, to end at $US26.877 an ounce, with the metal notching a weekly decline of 3%, based on the most-active contract.
In other metals, September copper fell 5.7 cents, or 1.9%, to settle at $US2.9175 a pound, for a weekly gain of 2%. The price fell 4.85 cents on Thursday after hitting a two year high on Wednesday of $US3.0295 a pound.
And iron ore prices closed the week at $US127.44 a tone, down $US1.94 on the day but up $4.94 or 4%.
Meanwhile, oil futures finished lower Friday, under pressure from continued worries over prospects for demand and the stronger US dollar.
In New York West Texas Intermediate crude for October delivery lost 48 cents, or 1.1%, to finish at $US42.34 a barrel, while October Brent crude shed 55 cents, or 1.2%, to settle at $US44.35 a barrel.
WTI ended the week with a gain of 3 cents, or 0.1%, while Brent fell 1%.
Crude futures were pressured after oil-field services company Baker Hughes reported that the number of active US oil rigs rose by 11 last week to 183, ending three-weeks of declines.
The number of rigs has collapsed this year in response to crude’s pandemic-induced plunge, in demand (which continues) with the number of units down 571 from the same time last year.
Surveys of business activity showed an easing in the pace of expansion in the eurozone but higher in the US.
Asian surveys were mixed and data from China suggests the economy is fading.
“Simply put, demand for crude has waned over the past month. Firm refinery run rates paired with an increased amount of refined product output and weak end-use demand leads to an excess of gasoline and diesel being exported or dumped onto the open market,” said Michael Tran, an analyst at RBC Capital Markets, in a note, according to a report on marketwatch.com.
