Commodity prices held steady last week as the G20 summit stoked hopes of an economic upturn and rising demand for raw materials but gold fell as world leaders agreed to sell reserves to help fund IMF lending. Markets were overshadowed Friday by news that the US unemployment rate jumped to a fresh 25-year high of 8.5 percent in March as recession-battered employers shed another 663,000 jobs.
The monthly snapshot of the labour market, seen as one of the best indicators of economic momentum, showed widespread losses across most sectors of the economy as the jobless rate rose from 8.1 percent in February. The figures are a cause for concern because the United States is one of the world's biggest commodity consumers, analysts said.
OIL: Oil prices paused after a volatile week as investors reacted to a mixed outlook for the global economy and US energy inventory data. Prices jumped sharply early in the week on hopes of improved demand thanks to G20 efforts to kick-start the global economy. However, they fell late Friday after the US unemployment report.
"We continue to believe that weak economic growth and slumping oil demand over the next few months will mean any rallies in the crude oil price will be unsustainable," said Deutsche Bank analyst Michael Lewis. Leaders from the Group of 20 rich and emerging economies agreed Thursday at a London summit on a raft of measures to pull the global economy out of its current crisis, including a huge funding programme.
The summit also allocated more than one trillion dollars to the International Monetary Fund and other institutions, ordered a crackdown on tax havens and excessive corporate pay, and new measures to help poor nations. A deepening world-wide recession has ravaged energy demand and slashed oil prices from their record peaks of above 147 dollars last July.
The Opec cartel said it could accept a 40-50 dollars price range for crude in light of the severity of the current economic downturn. "2009 is the most difficult year that the world will face in all its history," Opec secretary general Abdallah El Badri said. "With this 40-50 price, maybe we can live with it for 2009 because of the present circumstances," he said, but added.
"We are not happy to live with 50 (dollars)." Opec, the Organisation of Petroleum Exporting Countries, pumps 40 percent of world oil. US stockpiles of gasoline (petrol) rose 2.2 million barrels in the week ended March 27, compared with analyst forecasts for a drop of 1.1 million barrels.
By Friday, on the New York Mercantile Exchange (NYMEX), light sweet crude for delivery in May had eased to 51.89 dollars a barrel from 52.21 dollars a week earlier. On London's InterContinental Exchange (ICE), Brent North Sea crude for May firmed to 52.49 dollars a barrel from 51.80 dollars a barrel a week earlier.
PRECIOUS METALS: Prices diverged, but gold dipped briefly under 900 dollars per ounce after the G20 said they would seek to sell IMF gold reserves to raise funds to help the world's poorest nations. "Price action was mixed across precious metals ... as stock markets rose on optimism at the G20 summit commitments to expand funding for the IMF and aid for global trade financing," said Barclays Capital analysts.
"Gold prices came under pressure following the G20 discussions over the IMF selling its gold holdings to fund development programs. "The IMF has previously disclosed the possibility of selling 403.3 tonnes of gold but confusion as to whether the statement proposed sales in addition to these weighed on gold," they added.
The metal also came under pressure as rising world stock markets sent cash flowing back into equities. Gold is regarded as a safe haven in times of financial turmoil but suffers when investors feel confident enough to look elsewhere. "Gold prices remained weak against improved equity markets," said Lewis at Deutsche Bank. By late Friday on the London Bullion Market, gold had fallen to 905 dollars an ounce from to 924 dollars a week earlier.
Silver fell to 12.68 dollars an ounce from 13.22 dollars. On the London Platinum and Palladium Market, platinum rose to 1,139 dollars an ounce at the late fixing on Friday from 1,131 dollars a week earlier. Palladium gained to 219 dollars an ounce from 215 dollars.
BASE METALS: Base metals prices rose, reflecting gains in equities as investors looked ahead to an expected easing of the worst global slump since the 1930s and a pick up in demand. "We believe industrial metal prices are being supported by the recent rally in global equity markets," said analyst Joel Crane at Deutsche Bank.
By Friday on the London Metal Exchange, copper for delivery in three months rose to 4,179 dollars a tonne from 3,994 dollars the previous week.
-- Three-month aluminium gained to 1,450 dollars a tonne from 1,415 dollars.
-- Three-month lead climbed to 1,280 dollars a tonne from 1,262 dollars.
-- Three-month tin advanced to 10,550 dollars a tonne from 10,175 dollars.
-- Three-month zinc rose to 1,341 dollars a tonne from 1,335 dollars.
-- Three-month nickel increased to 10,750 dollars a tonne from 9,649 dollars.
COCOA: Cocoa prices were mixed.
By Friday on Liffe, London's futures exchange, the price of cocoa for delivery in July had edged down to 1,908 pounds a tonne from 1,923 pounds a week earlier. On the New York Board of Trade (NYBOT), the May cocoa contract nudged up to 2,694 dollars a tonne from 2,585 dollars.
COFFEE: Coffee prices held steady. By Friday on Liffe, Robusta for delivery in July had firmed to 1,543 dollars a tonne from 1,540 dollars a week earlier. On the NYBOT, Arabica for May rose to 116.15 US cents a pound from 115.55 cents.
GRAINS AND SOYA: Grains and soya prices were higher. By Friday on the Chicago Board of Trade, maize for delivery in May rose to 4.01 dollars a bushel from 3.87 dollars the previous week. May-dated soyabean meal - used in animal feed - gained to 9.80 dollars from 9.17 dollars. Wheat for May increased to 5.53 dollars a bushel from 5.07 dollars.
SUGAR: Sugar prices were higher. By Friday on Liffe, the price of a tonne of white sugar for delivery in May rose to 400 pounds from 388.30 pounds a week earlier. On NYBOT, the price of unrefined sugar for May climbed to 12.78 US cents a pound from 12.58 cents.