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Precious Metals

Gold rounded out the week in desultory fashion on Friday, peaking only at $938 at noon, and retreating from there to close at $933.70/oz., up $1.40. For the week, gold was off half a percent.

Platinum was locked in again yesterday, rarely straying from a range between $1205 and $1210 all day long, ending at the bottom at $1205/oz., up $4. For the week, platinum lost 3.6%.

Silver started the day up in Hong Kong trading, and rose to a peak of $14.35 right at the noon hour, but then slipped through the rest of the Comex and went flat on the Globex, closing at $14.19/oz., unchanged. For the week, silver skidded 4.3%.

Another day of so little movement for the precious metals that silver didn't even budge in the end, while gold and platinum moved fractionally higher.

Gold might have been expected to gain a little traction with the dollar on the decline for the day, but it didn't happen. Possibly declining oil prices played in, or perhaps the early summer traders are just listless.

The loss for the week may have been very small, but nevertheless gold was down for the third week in a row, the metal's longest losing streak in two months.

Gold is likely to find further scaled-down support as investor dip-buying continues, commented James Moore, of But short-term, gold may look to spend some time consolidating as traders assess developments in the global economies.

Moore added, with Sherlockian insight, that the financial markets as a whole are lacking clear direction.

Reading the technical tea leaves, The gold market has been in a tight, $13 trading range for the past five trading days and appears technically anemic, said Ralph Preston, of Heritage West Futures in San Diego. With this week's consumer-price index and producer-price index reports indicating a subdued inflation rate, a dip below $927 an ounce hints at a drop back down to $900 an ounce support level in the coming week.

And Platinum-group metals prices continue to consolidate around their recent lower levels, supported by further inflows into the physically backed ETPs, wrote Suki Cooper of Barclay's.

Currencies and Economic News

In the currency market, the dollar slipped against the euro. Late Friday, the euro was trading at $1.3952 vs. $1.3889 on Thursday.

Analysts surmised that rising global equity markets indicated an expanded willingness among investors to take a flyer with riskier assets.

But no clear trend appears to be developing.

While sentiment appears to remain mostly dollar negative, the inability of the euro to establish a convincing foothold above $1.40 disappoints the dollar bears, said analyst at Brown Brothers Harriman. The euro appears stuck in the $1.3750-$1.4050 trading range.

With no major economic numbers coming from either the euro zone or U.S. yesterday, investors were beginning to shift their attention to next week's meeting of the Federal Reserve's policy-setting Federal Open Market Committee.

The Fed is likely to sound more upbeat on growth prospects than it did in its April statement, wrote Steven Englander, of Barclays Capital.

Englander believes that policy makers will also likely try to deter speculation that they will soon raise the fed funds rate from its current range of zero to a quarter-percentage point. If they do, The emphasis on flatness for an extended period could be a U.S. dollar negative, Englander said.


In the energy market on Friday, crude for July delivery declined, closing at $69.55/barrel, down $1.82. July reformulated gasoline plunged 10.51 cents, to $1.9244/gallon.

Our bearish view on oil price is mainly the result of a lingering weak demand for oil products and relatively high oil [inventories levels], said Commerzbank analysts.

Crude moved higher earlier, as Investors are looking for a confirmation of their bullish expectations and find it in the news flow from Nigeria, the Commerzebank analysts said..

The Movement for the Emancipation of the Niger Delta said yesterday that it blew up a pipeline belonging to a subsidiary of Eni SpA. It was the latest of a string of attacks against oil companies. The pipeline, owned by Agip, delivers crude to the Brass export terminal, which has a daily capacity of about 160,000 barrels.

In the natgas arena, the fuel posted a gain on the week, with July futures adding 15 1/2 cents (4%), to $4.032 per million British thermal units.

Base Metals

The base metals were very sluggish again on Friday. Copper was flat until the late pre-dawn hours, but rose from there to the late morning before falling off sharply after noon to finish at $2.238/lb., down a penny and a quarter. Nickel didn't move much all day and ended at $6.7563/lb., down 2 1/4 cents. Zinc was up steeply to late morning then down equally steeply to close unchanged, at $0.6942/lb. Aluminum had a good day, adding more than a penny and a third, to $0.7403/lb., while lead tacked on less than a quarter-cent, at $0.753/lb.

Copper was little changed for the second day in a row, as none of the industrial metals did much, but fell a bit as traders speculated that China may import less after stockpiles monitored in Shanghai rose to their highest level since March 2008.

With China's State Reserve Bureau stockpiling copper, inventories monitored by the Shanghai Futures Exchange climbed 13% over the past week. China accounted for 38% of global copper demand in Q1, up from 27% a year earlier, according to Barclays Capital estimates.

The market is worried about Chinese demand, wrote Societe Generale analysts in London. The analysts said they are bearish on copper because of fundamentals and sentiment.

Added Gayle Berry of Barclays, There is widespread speculation that China's base-metal buying will weaken in the coming months, but it doesn't look as though this has been priced in just yet.

Stockpile data remain supportive. Copper inventories monitored by the LME drifted lower by 1,250 metric tons yesterday, to 280,350 tons.

Only a close under $2.17 nullifies the current upward sloping trend line in copper futures, said Ralph Preston, of Heritage West Futures in San Diego. Copper is acting as a barometer for market participants as they gauge perceptions that the economy is slowly getting better.

That's what's happening ... have a great weekend and see you Tuesday!

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