Gold heads for its worst weekly losing streak in 16 years
Gold headed for a sixth consecutive weekly fall in its worst weekly losing streak in 16 years, while copper was poised to shed as much as 9% this month and Brent crude was set for a fifth straight weekly plunge through Friday, as commodities continue to be drubbed in the global market.
The Bloomberg Commodity Index —which tracks the prices of 22 commodities — has dropped 10% this month to 92.32 (intraday), hovering around a 13-year low on Friday.
Gold was poised to witness its sharpest monthly decline in more than two years in July, as apprehensions about a hike in the US interest rates for the first time in a decade strengthened the dollar against a basket of major currencies and improved the appeal of competing assets of the bullion.
Spot gold lost 0.6% to $1,081.30 an ounce by 0945 GMT on Friday, having lost 1.6% this week, while US August gold contract fell 0.9% to $1,079.10 an ounce. The metal has shed 7.4% so far in July, its sharpest drop since June 2013. The precious metal had hit a five-and-a-half year low of $1,077 in intraday trade on July 24.
The dollar has gained almost 2% this month against a basket of important currencies, making the dollar-denominated bullion more expensive for foreign investors. The greenback usually shares an inverse relation with gold. Already, fresh data revealed the US economy grew 2.3% in the second quarter, while first-quarter gross domestic product was revised up to show growth of 0.6% instead of a contraction reported earlier. This has further brightened the possibility of the the Federal Reserve raising the interest rates, possibly at its next meeting in September.
Copper and most other base metals extended the negative price trend on Friday on concerns about the economic uncertainties in top consumer China, with copper in London heading for the biggest monthly plunge since January and second largest since 2012.
Having dropped 1.3% in the last session, three-month copper on the London Metal Exchange lost 0.5% to $5,233.50 a tonne by 1000 GMT. However, according to the research report by Societe Generale, a further cut in supply by miners is unlikely because miners’ output costs have dropped more-than-expected owing to lower energy prices and weak emerging market currencies. In other base metals, nickel lost 0.3% to $10,995 a tonne.
Brent crude oil prices dropped further on Friday after top OPEC official hinted there may not be any reduction in supplies to boost prices.
Abdullah al-Badri, secretary general of the Organization of the Petroleum Exporting Countries, said on Thursday that rising demand would prevent a further drop in oil prices and suggested reduction in OPEC output could have only marginal impact on the market.
Having lost 7 cents in the last session, Brent crude lost 70 fell at $52.61 a barrel by 0935 GMT, while the US benchmark crude declined 90 cents at $47.62 a barrel.