Gold fell, oil fell, other commodities weakened (but most still finished the week with gains, except oil).
In a day of volatile trade and a mix of mixed market signals, commodities and equities were left a bit confused about the path of the US dollar (which rose in afternoon dealings in New York) and the timing and size of the expected move by the Fed to resume buying government debt to stimulate the economy.
On Friday, Fed chairman Ben Bernanke delivered his most explicit signal yet that the Fed is likely to use easier monetary policy as soon as its next meeting in November.
But he failed to offer the details that some investors (the poor dears) are demanding to keep the rally going.
Gold rose to within two US dollars of Thursday’s all-time high at $US1387.10 an ounce on a knee-jerk rally immediately following Bernanke’s remarks, which initially weakened the greenback.
But the metal then eased as the US dollar bounced on second thoughts among investors and a spate of profit taking.
Seeing gold (along with copper and some shares) is looking overbought (and the dollar oversold), a bit of profit taking is to be expected.
But the US bond market has sold off significantly in the past week ahead of the expected Fed easing as investors start pricing in a rise in inflation.
They must be thinking 2011 or 2012, because inflationary pressures are just not being seen anywhere in the US economy at the moment.
In fact it’s fear of the gathering deflationary forces with core US consumer prices running at just under 1%, annual, in the year to September, and have been at zero for the past two months.
So the US dollar bounced from an eight month low against the euro.
And that took gold lower with spot gold falling to $US1366.50 an ounce in late US trade and the December Comex futures contract dropped $US5.60 at $US1,372.
It spiked to an intraday high of $US1,386.40 just before floor trading opened on Friday, when eased after the detail in Bernanke’s speech became known.
Gold closed at a record high Thursday, settling at $US1,377.60, its 17th record in little more than five weeks. For the week, prices remain up 2%.
Traders said that Comex gold volume was heavy during Friday’s correction at about 190,000 lots, 34% above its 30-day average.
But gold is still up around 25% so far this year.
Among other precious metals, silver fell 1.5% to $US24.25, platinum slipped 1% to $US1688 an ounce and palladium was trading down 1.7% at $US587.50 an ounce.
Silver rose by 5.1% over the week.
And China says it’s looking to produce 340 tonnes of gold this year, increasing from 2009.
That will be up from 314 tonnes produced in 2009. No other details were revealed by the government.
Comex December copper added 2c, or 0.6%, to $US3.84 a pound.
Prices were up 1.9% for the week.
Oil prices fell nearly 2% and wiped out the week’s gains in trading Friday in New York.
It was the first weekly lost in four.
Like other commodities and markets, oil prices rose early after US Federal Reserve chairman Ben Bernanke signalled that the central bank was moving closer to the another round of quantitative easing.
But prices weakened later on the view that any such quantitative easing was already priced in the market and as the dollar rose on profit-taking, with traders saying it was oversold.
Nymex November crude fell $US1.44, or 1.7%, at $US81.25 a barrel, after trading in a range from $US80.75 to $US83.33.
For the week, front-month NYMEX crude fell $US1.41, or 1.71%.
In London, ICE December Brent crude fell $US1.75, or 2.1%, to end at $US82.45, after sliding to a low of $US81.95.
For the week, front-month Brent crude fell $US1.58, or 1.9%, its first weekly loss in eight weeks.
OPEC decided on Thursday to leave its oil output policy unchanged, as it has done since agreeing to a record output cut in December 2008.
Chicago December wheat futures for December delivery rose 3.75 USc, to end at $US7.045 a bushel. That came despite the rise in the US dollar.
Wheat fell 2.1% last week, the third decline in four weeks.
Corn prices rose 6.6%, soybean prices were up 4.1%, despite an easing on Friday from 16 month highs.
Cotton futures hit a new 15 year high, then fell 4.4% in New York, but were still up 2.5% for the week.
Sugar futures eased, but not without another strong week.
They fell 3.1% on Friday to 27.06 USc a pound in New York.
That left them up 2.8% for the week.
