LONDON  - Commodity prices diverged this week as traders weighed up weak global growth data, escalating eurozone debt fears and the latest outlook by the US Federal Reserve.
Trading was volatile on Friday as official data revealed a sharp slowdown in US gross domestic product and worsening economic news for eurozone member Spain.
OIL: World oil prices were mixed over the course of the week that ended with official data Friday showing US economic growth slowed sharply to 2.2 per cent in the first quarter of the year. Gross domestic product (GDP) growth had hit 3.0 per cent in the final quarter of 2011.
The Federal Reserve on Wednesday said it saw US growth picking up and unemployment falling by the end of the year, as it stuck fast to existing stimulus policies despite some short-term economic headwinds.
Oil prices meanwhile began the week lower as downbeat Chinese data and eurozone uncertainty cast doubt on the strength of global energy demand.
Investors were spooked by results in France’s presidential vote that left President Nicolas Sarkozy hunting for far-right votes after losing to Socialist Francois Hollande in a first round vote.
The right-wing incumbent moved quickly to woo the 18 per cent of voters who backed the anti-immigrant National Front led by Marine Le Pen, saying they deserved an answer to their concerns.
Across in Asia, all eyes were fixed on HSBC’s China purchasing managers index (PMI) that showed factory output rose to 49.1 in April from 48.3 in March.
However, the reading remained below the key boom-or-bust 50-point level, indicating an improvement but no return to expansion just yet.
China’s economy is closely watched by oil traders as it is the world’s largest energy consuming nation.
Eurozone debt catagion meanwhile came to the fore as it was revealed that Spain’s unemployment rate spiked to almost 25 per cent in the first quarter, during which the country also fell back into recession.
“The eurozone trouble is causing a lot of worry about (oil) demand,” said Newedge broker analyst Ken Hasegawa. S&P on Thursday cut Spain’s rating by two notches to BBB-plus and added a negative outlook, saying it expected the economy to shrink this year and next.
It also warned that the government’s budget situation was worsening and that its banks would likely rely increasingly on official sources for funding as they grapple with piles of bad loans, especially in real estate.
By late Friday on London’s Intercontinental Exchange, Brent North Sea crude for delivery in June dipped to $119.20 a barrel from $119.21 a week earlier.
On the New York Mercantile Exchange, West Texas Intermediate or light sweet crude for June rose to $104.23 from $103.88.
PRECIOUS METALS: Prices were mixed, with gold rising and sister metal silver heading south.
“Gold prices have edged higher after this afternoon’s GDP number from the US came in light prompting concerns about further loose policy from the Fed,” said CMC Markets analyst Michael Hewson.
By late Friday on the London Bullion Market, gold gained to $1,663.50 an ounce from $1,641.50 a week earlier.
Silver fell to $31.14 an ounce from $31.79.
On the London Platinum and Palladium Market, platinum eased to $1,573 an ounce from $1,579. Palladium climbed to $677 an ounce from $666.
BASE METALS: Prices rebounded, lifted by the Federal Reserve’s latest outlook according to traders.
But William Adams, an analyst at financial company Fast Markets, cautioned: “We feel the global economic conditions are still weakening and therefore we do not expect the stronger tone to last too long.”
By late Friday on the London Metal Exchange, copper for delivery in three months rallied to $8,408 a tonne from $8,181 a week earlier.
Three-month aluminium grew to $2,106 a tonne from $2,081.
Three-month lead gained to $2,137 a tonne from $2,117.
Three-month tin climbed to $22,451 a tonne from $21,650.
Three-month nickel increased to $18,362 a tonne from $17,858.
Three-month zinc advanced to $2,042 a tonne from $2,024.
COCOA: Cocoa futures gained on tight supply concerns in major producer Ivory Coast.
By Friday on LIFFE, London’s futures exchange, cocoa for delivery in July rose to £1,512 a tonne from £1,452 a week earlier.
In New York on the NYBOT-ICE, cocoa for July gained to $2,283 a tonne compared with $2,221.
COFFEE: Coffee prices dropped, weighed down by expectations of a large Brazilian crop. By Friday on NYBOT-ICE, Arabica for delivery in July fell to 176.05 US cents a pound from 177.30 cents a week earlier.
On LIFFE, Robusta for delivery in July slid to $2,007 a tonne from $2,031.
SUGAR: Sugar futures hit multi-month lows as the International Sugar Organization forecast a global surplus of more than 6.0 million tonnes for the 2011/12 season, up from a previous estimate of 5.17 million tonnes.
By Friday on LIFFE, the price of a tonne of white sugar for delivery in August dropped to $572.80 from $582.90 a week earlier. On NYBOT-ICE, the price of unrefined sugar for July fell to 21.05 US cents a pound from 21.67 cents.