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Commodities markets focused on risk again following weak economic figures from Germany, with gold gaining ground and concerns about global growth hitting oil and industrial metal prices.
Weaker than expected second-quarter growth data from Germany – which has so far been the engine of Europe’s recovery – gave rise to worries about the eurozone’s prospects as well as adding to fears of a global slowdown.
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Bullion was up 0.6 per cent a troy ounce to 1,775.65 in European morning trading. Although the recent rally has led to some profit-taking, many investors are waiting to pick up gold on price-dips, said analysts.
“Gold is very interesting. Investors who are worried about inflation look at it, investors who are worried about deflation look at it. People who think the economy is going to be strong look at it and those who think the economy is weak look at it,” said Adam Sieminski, chief energy economist at Deutsche Bank.
Oil lost ground amid the renewed “risk-off” environment, with the ICE September Brent, the benchmark oil price, down $1.20 at 108.71 and the Nymex September West Texas Intermediate falling $1.23 86.65.
“In this environment, companies will not go on a hiring spree and the GDP forecasts will gradually be revised lower and with it the oil demand expectations for next year,” said Olivier Jakob at consultancy Petromatrix.
Industrial metal prices were also affected. Copper, which looked to regain the $9,000 a tonne mark at the start of the week, lost ground, with the metal for three-month delivery traded on the London Metal Exchange, down 1.61 per cent to $8,788.75 a tonne. Aluminium declined 0.75 per cent to $2,371 a tonne.
Grains, which saw support from supply concerns last week, lost ground on profit-taking after closing lower in the US. Wheat for September delivery fell 0.25 per cent to $7.10¾ a bushel and corn down 0.4 per cent at $7.04½.
