Many commodity prices continued to fall this week, mirroring a downward trend on global stock markets, with metals recording further heavy losses while crude futures also slipped. Plunging prices have left analysts pondering whether the metals markets have been gripped by a speculative fever over the past six months.
"We are now convinced that these performances reflect the formation of a speculative bubble," said Frederic Lasserre, an analyst at French investment bank Societe Generale.
Prices began to turn in the middle of May after a six-month rally that culminated in record highs for the price of cooper, aluminium, platinum, zinc, nickel, while gold and silver had struck their highest levels in 26 years.
Soft or agricultural commodities, meanwhile, fared slightly better than hard commodities this week.
On Friday, the Commodities Research Bureau's index of 17 commodities fell to 340.30 points, from 345.64 points the previous week.
GOLD: Gold prices sank close to a two-month low in reaction to the slaying of al Qaeda's chief in Iraq and a stronger US dollar.
"Metal prices continued to soften, led by upward gyrations in the dollar and a slight reduction in safe-haven premium following news of the death Abu Musab al-Zarqawi, al Qeada's leader in Iraq," said James Moore, analyst for specialist website TheBullionDesk.com.
Gold prices touched 604.65 dollars per ounce on Friday, the lowest point since April 14. It has now fallen 17 percent since striking a 26-year high of 730.40 dollars on May 12.
A stronger dollar makes commodities priced in the US unit on world markets more expensive for buyers using other currencies.
Investors normally seek refuge in gold which is seen as a safe store of value in times of geopolitical uncertainty.
On the London Bullion Market, gold prices fell to 616 dollars per ounce at Friday's late fixing, from 632.25 dollars a week earlier.
SILVER: Silver prices slid to a two-and-a-half-month low.
"The volatile conditions have the potential to trigger further sharp price falls," Moore said.
The price of silver hit 11.03 dollars per ounce on Thursday, marking the lowest level since March 29.
In mid-May, silver had struck 15.22 dollars for the first time since December 1980 - and has since plummeted by 26 percent.
On the London Bullion Market, silver prices dropped to 11.41 dollars per ounce at Friday's fixing, from 12.15 dollars the previous week.
PALLADIUM AND PLATINUM: Platinum and palladium dropped in line with other metals.
Platinum prices struck 1,191.50 dollars per ounce on Friday, the lowest point since May 9. It has sunk 11 percent since hitting a record high of 1,340 dollars on May 12.
Palladium hit a low of 310 dollars per ounce on Friday, last seen March 21, and has now shed some 24 percent since reaching a peak of 406.50 dollars in mid-May.
In Friday trading on the London Platinum and Palladium Market, platinum fell to 1,200 dollars per ounce at the late fixing, from 1,240 dollars the previous week.
Palladium sank to 324 dollars per ounce on Friday from 348 dollars the previous week.
BASE METALS: Base metal prices fell across the board.
"The background of weak equities and weak gold, as funds reduced their positions, combined with a stronger dollar all added weight to the base metals complex," said William Adams, analyst at the specialist website BaseMetals.com.
In the past month, the price of copper has dropped 16 percent and aluminium has fallen 24 percent.
Base metals, including aluminium, copper and zinc, have fallen from record highs in recent weeks owing to global concerns over rising inflation.
Those historic peaks had been struck as low global inventories, supply disruptions and concern over Iran prompted frenzied speculative buying.
On Friday, three-month copper prices on the London Metal Exchange decreased to 7,360 dollars per tonne from 7,851 dollars the previous week.
Three-month aluminium prices declined to 2,528.50 dollars per tonne from 2,631 dollars the previous week.
Three-month nickel prices fell to 20,050 dollars per tonne from 21,600 dollars.
Three-month lead prices decreased to 1,011 dollars per tonne from 1,060.50 dollars.
Three-month zinc prices dropped to 3,420 dollars per tonne from 3,565 dollars.
Three-month tin prices plunged to 7,900 dollars per tonne from 8,285 dollars.
OIL: Crude futures slipped after news of buoyant US energy reserves, as traders monitored geopolitical developments in oil-producing nations.
US motor fuel supplies rose for the sixth successive time during the week to June 6, further dampening supply concerns in the peak-demand American driving season, while crude stockpiles also climbed.
The market was buoyed by news on Thursday of the killing of al Qaeda's chief in Iraq, but price falls were limited by concerns over Iran - the world's fourth-biggest crude producer.
Abu Musab al-Zarqawi, who had orchestrated a bloody campaign of attacks and beheadings in Iraq, was killed Wednesday in an air strike on a house north of Baghdad.
Zarqawi's death led to "hopes of improved stability in the country, where frequent attacks have severely reduced oil output", according to Sucden analyst Sam Tilley.
Owing to persistent violence and sabotage, Iraq struggles to produce 2.0 million barrels of oil per day, compared with 2.5 million before the US-led invasion of the country in March 2003.
Added to the geopolitical picture on Thursday was news that five South Koreans taken hostage by Nigerian militants were freed, according to the Movement for the Emancipation of the Niger Delta, which had been holding them.
Elsewhere, Iran accelerated uranium enrichment on the same day this week that world powers asked it to halt the work and open talks to guarantee it will not make nuclear weapons, according to an International Atomic Energy Agency report obtained by AFP.
Hopes for an end to the Iran crisis had been raised by a relatively positive response from Tehran to a package of Western trade and political incentives offered in return for halting its uranium work.
On Friday in London, a barrel of Brent North Sea crude for delivery in July eased to 70.25 dollars per barrel, from 70.34 dollars the previous week.
In New York, a barrel of crude for delivery in July rose to 71.20 dollars per barrel on Friday from 71.32 dollars the previous week.
RUBBER: Rubber prices bounced higher, touching 315.20 yen in Tokyo on Thursday.
That was not far off the historic peak of 317.40 yen, reached on May 30 on speculative and investment buying.
"The usual fund manager interest is still there in Tokyo," said Corrie Maccoll analyst Rashid Ahmed.
On TOCOM, Tokyo's commodity exchange, natural rubber for October delivery rose to 310.50 yen per kilogramme on Friday, from 298.20 yen a week earlier.
Singapore's RSS 3 October contract increased to 311.40 US cents per kilogramme on Friday, from 258.50 cents a week earlier.
COCOA: Cocoa prices were mixed.
"London cocoa was up over 6 percent at one point ... driven by speculator buying," Sucden analysts said.
On the Liffe, London's futures exchange, the price of cocoa for July delivery climbed to 878 pounds per tonne on Friday, from 849 pounds a week earlier.
On the New York Board of Trade (NYBoT), the July contract dipped to 1,479 dollars per tonne on Friday, from 1,482 dollars a week earlier.
COFFEE: Coffee prices fell owing to a stronger US dollar and expectations of a significant harvest crop in key producer Brazil.
"The Arabica market continues to suffer from... the expectation of a bumper crop in Brazil this year," Sucden analysts said.
On Liffe, Robusta quality for July delivery slid to 1,141 dollars per tonne on Friday, from 1,166 dollars a week earlier.
On NYBoT, Arabica for July delivery sank to 97.35 US cents per pound on Friday, from 100.60 cents.
SUGAR: Sugar prices enjoyed mixed fortunes.
"Fundamentally the industry feels that demand and supply are roughly in balance this season with the main factors guiding the market being the percentage of the Brazilian crop put into ethanol production and the level of demand for sugar," Sucden analysts said.
Sugar cane is used to produce ethanol, a cheaper alternative to motor fuel, or gasoline, which is refined from crude oil.
On NYBot, the price of unrefined sugar for July delivery dropped to 15.09 US cents per pound, from 15.24 cents.
On Liffe, the price of a tonne of white sugar for August delivery increased to 446.50 dollars, from 454.10 dollars a week earlier.
GRAINS AND SOYA: Wheat, maize and soya prices beat a retreat, pressured by forecasts of favourable weather conditions which boost supplies.
On May 23, wheat had struck 4.33 dollars per bushel - the best level since September 2002 - on expectations that US stocks of the grain will fall - but prices have since dropped on profit-taking.
On the Chicago Board of Trade, the price of wheat for July delivery slipped to 3.89 US dollars per bushel on Friday, from 3.98 dollars a week earlier.
Maize for July delivery stood at 2.47 dollars per bushel on Friday, from 2.56 dollars.
July-dated soyabean meal - used in animal feed - slid to 5.88 dollars per tonne on Friday, from 5.93 dollars.
On the Liffe, the price of a tonne of wheat for July delivery fell to 77.00 pounds on Friday, from 79.50 pounds.
COTTON: Cotton prices edged higher owing to forecasts of reduced US production during 2006/2007.
On the New York Cotton Exchange (NYCE), the July contract rose to 52.95 US cents per pound on Friday, from 52.55 a week earlier.
The Cotton Outlook Index of physical cotton firmed to 55.80 US cents on Thursday, from 55.35 US cents a week earlier.
WOOL: Wool prices stabilised, also reflecting quiet trading conditions.
The Australian Eastern index closed at 7.28 Australian dollars per kilo on Thursday, compared with 7.27 Australian dollars a week earlier.
The British Wooltops index stood at 398 pence on Thursday, compared with 403 pence a week earlier.
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