Crude oil price bounced a bit in European session after strong economic data from the Eurozone and the UK. The market sentiment was damped yesterday as Fed Chairman Ben Bernanke delivered relatively dovish comments about economic outlook. Currently trading at 77, the front-month WTI contract plunged from 78.57 to as low as 76.2 before settling at 76.56. Trading has been volatile in recent days but price has been refined within a range between 74 and 79.
UK's retail sales rose +0.7% m/m in June, compared with market expectations of +0.5%, after rising +0.8% a month ago. Excluding energy prices, the reading soared +1% on monthly basis and +3.1% on annual basis.
In the Eurozone, manufacturing PMI improved to 56.5 in July from 55.6 in the prior month. The market had anticipated a dip to 55. The reading for Germany soared +2.8 points to 61.2, compared with market expectations of a drop to 58. Activities in the services sector also improved with the PMI for the 16-nation region as a whole adding +0.5 points to 56 and Germany's PMI gained +2.5 points to 57.3. Moreover, Eurozone's industrial new orders jumped +3.8% m/m in May after gaining +0.6% in the prior month.
The positive data boosted equities. UK's FTSE index rose almost +1% after opening lower. Germany's DAX and France's CAC 40 surged more than +1%.
While buying interests have emerged around 1180, gold's near-term outlook remains weak as concerns over sovereign crisis in the Eurozone recedes.
Platinum appears to have found a floor at around 1500 and we believe production problems in South Africa should prevent price from slumping from current level. The government has become more concerned about labor safety after mining accidents happened recently. Northam Platinum said 2 workers were killed in an accident at its Zondereinde mine today. Earlier in the month, 5 workers were killed at the Marikana platinum mine owned by Aquarius and Anglo Platinum. The government then issued the directive to reduce the width of rock between supporting pillars underground by -40% to 6 meters to help prevent rock collapses.
Although Aquarius Platinum released statement clarifying that the directive does not aim at curbing mining and the company will 'reviewing mine design and support parameters to present best-practice guidelines to the DMR in respect of each of its mines individually', we believe platinum production will be affected and reduction in platinum supply should be supportive for the metal.