Bullion
Last week was mostly uneventful with respect to the economic data releases and as a result the market was rather noisy. The yellow metal climbed just short of its all time high as the metal carried forward its buying momentum that it had picked up during the previous week.
However, bargain hunting and eager profit booking emerged at highs that rendered the yellow metal cheaper to investors. Nevertheless, weaker than expected industrial activity in Germany1, the biggest economy in the European Union, did induce sparks of buying the counter.
Fear that Chinese government would take steps to tighten its monetary policy also setoff gold’s safe haven appeal. The safe haven assets including gold and treasures were also hit following the smooth sales of Portugal and Polish debt auctions. The Portuguese $21 billion debt auction witnessed the highest participation in more than a year.
In addition, the US jobless claims fell to the lowest in two months and nations trade deficit narrowed more than expected, resulting in it strengthening the riskier assets such as commodities and equities.
Energy
Crude oil prices started the week slow as rising inventories and the fright of a slowing economy reduced the potential strength in the counter. However, oil prices picked up momentum as the week progressed following weakness in the US dollar against its European counterpart and due to a drop in inventories.
The market also remained pressured as demand signals weakened after the seasonal demand for crude oil waned. The EIA reported that stocks of crude oil fell 1.85 million barrels to 359.9 million and that of distillate and gasoline declined by 388000 and 243000 barrels respectively.
Positive US economic data also add gains to oil last week. While, the OPEC has reduced the demand for OPEC crude owing to rising external supply2.
However, subsiding seasonal demand after the summer driving season has resulted in rising inventories of crude oil stocks. U.S weekly retail gasoline demand on average fell 0.5 percent to 9.126 million barrels per day last week as the summer driving season drew to a close, according to the Spending Pulse report released Wednesday by MasterCard Advisors.
Base Metals
Base metals prices were on up mostly during last week as weakness in the US dollar and better than expected data from US and Europe kept the sentiments mostly positive. The inventories of copper continued it fall at the warehouses monitored by the London Metal exchange.
In addition, Chinese imports data turned out to be more than expected3, advocating the strength in the counter. However, the red metal ended with losses last week following short reversals that emerged at highs. Fear that the Chinese will consider a monetary policy tightening also gave the investors the impetus to sell the metals.
