Bullion
All efforts of gold to rise were put down last week as the safe haven appeal of the yellow metal declined, resulting in it ending with losses. The stock markets stabilized and the concerns of European crisis eased after smooth sovereign debt auctions that were conducted in Spain, Greece and Portugal.
Gold prices displayed a tendency to move along side the commodities, which otherwise shared an inverse relationship with the metal recently due to the European economic crisis. Nevertheless, mixed economic data from the US and China kept the markets wary. US retail sales came out to be weaker than expected 1, with falling inflation as reported by the producers and consumers price indices.
Whereas, Chinese GDP growth fell short of expectations at 10.3 percent during the 2nd quarter of 20102, giving rise to fears of falling demand. In addition, Data supplied by the world's largest gold-backed exchange-traded fund, the SPDR Gold Trust and last updated on Thursday showed holdings of 1,314.211 tonnes, a steady decline since a record high of 1,320.436 tonnes in late June.
However, ratings cut continued in Europe with Moody rating agency downgrading Portugal’s rating to A1, keeping the markets on its toes, albeit briefly.
Energy
Crude oil prices ended with meager gains during the week amidst weak US dollar and mixed economic signals from US and China. Positive corporate earnings and a fall in stocks of crude oil supported the sentiments and lifted prices up towards a 13-day high, but failed to sustain the momentum as the markets remained uneasy following gloomy growth signals from US, the largest consumer of crude oil.
According to the Energy Information Agency, the stocks of crude oil fell more than expected last week3. Global daily oil demand will increase by 1.35 million barrels next year to 87.84 million barrels per day, the International Energy Agency said on Tuesday in its monthly Oil Market Report, compared with demand growth of 1.77 million bpd expected this year.
The 2010 forecast was revised higher by 80,000 bpd. The Chinese crude oil import figures also helped the counter to escape losses. China’s crude oil imports were 22.27 million tons, or 5.44 million barrels per day in June, up 34% year on year.
Base metals
Base metals prices were hit the hardest last week despite a fall in the US dollar. The European currency hit a four month high against the US dollar as less than impressive economic data releases reduced the expectations of an economic recovery. The market witnessed brief gains during the week as positive corporate earnings tried to improve the market sentiments.
However, weaker than expected Chinese growth and slowing production activity in the US kept the prices pressured last week. There was also news that Chinese copper production reached 422000 tonnes, up 6 percent, during the month of June.
China's refined copper production accounts for about 80 percent of actual domestic consumption expected for this year. Whereas, The International Lead and Zinc Study Group (ILZSG) has reported that zinc and lead are in a surplus of 209,000 tonnes and 34000 tonnes respectively for the first five months of the year 2010.
US Retail Sales Fall for the second month
The US retail sales fell for the second consecutive month for June as sales of petrol, cars and building materials dropped during the corresponding period. According to the Commerce Department of US, the total retails sales fell by 0.5 percent following a downward revised 1.1 percent fall in May.
However, the retail sales were up 4.8 percent as compared to the same time last year. If not for the dip in petrol and car sales, the total figure would have climbed 0.1 percent; the commerce department said.
Chinese growth below expectations
The Chinese GDP fell short of expectations during the second quarter as the government tries to fold back the stimulus extended during the time crisis. Annual gross domestic product growth moderated to 10.3 percent from 11.9 percent in the first quarter, the National Bureau of Statistics (NBS) said on Thursday. The expectations were for the growth to reach 10.5 percent. However, the markets gaze shifted to the much sharper fall in the factory growth of China, which fell to 13.7 percent in June from 16.5 percent during the month of May.
Crude oil Inventories fall more than expected
The Energy Information Administration’s oil inventory report showed that crude oil stocks fell 5.06 million barrels last week, against the expectation of a 1.2 million barrel drop. The EIA also reported that gasoline stocks rose 1.6 million barrels and distillate stocks rose 2.94 million barrels during last week. Whereas, US refinery Utilization rose 0.7 percent to 90.5, the highest level since the week to Jan. 4, 2008. The fall in inventories of crude oil was attributed to the fall in imports and rise in refinery utilization.
