Gold

GOLD has slumped to the lowest level since July, after minutes from a Federal Reserve meeting showed a debate over the risks and benefits of more stimulus. Platinum fell to a six-week low.

Gold for immediate delivery fell as much as 0.6 per cent to $1,555.55 an ounce, the lowest since July 12. A seventh day of losses would be the worst run since March 2009. Bullion for April delivery slumped as much as 1.5 per cent to $1,554.30 on the Comex, the lowest price for futures since June 29.

Minutes of the Federal Open Market Committee’s January 29-30 meeting showed policy makers were divided about the strategy behind Chairman Ben S. Bernanke’s programme of buying bonds. Some said an earlier end to purchases might be needed, while others warned against a premature withdrawal of stimulus.

Bullion climbed for a 12th straight year in 2012 as central banks from Europe to the US and China boosted stimulus. Gold surged 70 per cent as the Fed bought $2.3 trillion of debt in two rounds of easing from December 2008 through June 2011. The FOMC at its January meeting decided to continue $85 billion in monthly bond purchases. The metal has declined 6.7 per cent this year on signs of an improving US economy, the world’s largest. India, the world’s biggest gold buyer, may increase import taxes for a second time this year as it seeks to narrow a widening current-account deficit, curbing demand for bullion in jewelry and investment.

Platinum for immediate delivery dropped as much as 1.8 per cent to $1,617 an ounce, the lowest since January 11, and traded at $1,625. Palladium fell as much as 1.6 per cent to $726.95 an ounce, the cheapest since January 25, and was at $728.70. Spot silver declined 0.3 per cent to $28.47 an ounce.

Holding of SPDR gold Trust, the world’s largest gold-backed exchange-traded fund, slumped 1.57 per cent from the previous session to 1,299.164 tonnes on February 20, the lowest in more than five months.

In the London market spot gold fell as much as 1.6 per cent to its lowest since July at $1,578.06 an ounce. The metal looks vulnerable to further losses, with $1,575 and $1,564 seen as further support levels. On the following day gold rose $1581.80 an ounce and gained more than one per cent as weak US data raised concerns over the state of economic recovery.

Gold suffered last week from improving appetite for assets seen as higher risk, like stocks. Signs of an improving global economic outlook sent global equities to multi-year highs earlier on February 20, making precious metals less appealing.

In other precious metals, platinum fell 3.3 per cent to a five-week low of $1,632 an ounce, dented by gold’s weakness and easing supply worries in South Africa. Prices were seen at $1,640.50 an ounce, still down 2.8 per cent. The metal started to fall in the previous session after news that workers at Anglo American Platinum’s South African mines had returned to work after a one-day walkout. Analysts said that current losses might be seen as a sign that the market is pricing in South African mine disruption for the rest of the year.

Spot palladium fell 3.9 per cent to $731.72 an ounce. Spot silver also fell to its lowest since August 20 at $28.46 an ounce, before settling at $28.56, still down 2.9 per cent.

Oil

IN the New York market, crude oil posted its biggest daily fall so far in 2013 on February 20, and continued the fall on February 21 joining a sell off in precious metals and copper as market rumours circulated that a hedge fund was forced to liquidate substantial commodity positions and the possibility that the US Federal Reserve might curb its economic stimulus measures. Expectations that Saudi Arabia intends to raise production in the second quarter added pressure. Brent crude oil had risen by $10 a barrel in the first six weeks of 2013 to hit a nine month peak above $119 a barrel on February 8, as strong demand from China and lower supplies from Saudi Arabia tightened markets.

In the Singapore market, oil extended losses on February 20, with Brent slipping towards $115 a barrel after market rumours that a hedge fund was forced to liquidate substantial commodity positions led to the fuel’s largest daily fall in 2013. In the following day Brent April crude was down $1.75 at $113.85 a barrel. This was Brent’s lowest price since January 29. Bearish news of a potential rise in Saudi Arabia’s oil output and a possible slowdown in the bond buying programme of the US Federal Reserve also gave investors a chance to sell and take profit from a Brent bull run that has lasted nearly three months, traders said.

The US Energy Information Administration (EIA) and the 12 member Opec increased their outlook for world oil consumption growth, citing increasing signs of a recovery in the global economy. Consumption of oil will expand by 840,000 barrels per day this year, the Opec said in its monthly report, 80,000 bpd more than previously expected.

Due to higher demand, and the change in supply expectations from producers outside the group, Opec expects demand for its crude to average 29.75 million bpd in 2013, up 130,000 bpd from the previous estimate.

The EIA followed suit and increased its forecast for demand growth by 110,000 bpd to 1.05 million bpd in 2013 taking global demand to 90.2 million bpd this year, adding to evidence of global demand surpassing expectations in early 2013.

US crude inventory may have risen last week as refineries head into maintenance in world’s biggest oil consumer but an expected cut in imports may negate the impact in coming weeks. Crude stocks may have risen 2.4 million barrels in the week to February 8.

Oil markets got some relief from the push towards higher prices as tensions over Iran’s nuclear programme eased between the Islamic Republic and the United States.

Copper

IN the London market copper slid to its lowest in nearly two months on February 21, because of lack of demand from China, signs of slow growth in Europe and the US and concerns that the Federal Reserve may withdraw monetary stimulus. Copper touched an intraday low of $7813 a ton, its lowest since December 24.

In the London market, copper prices fell on February 20 to their lowest in more than a month, dragged down by persistent demand concerns as buying from top consumer China remained subdued, and with a strong dollar also weighing on prices. Trade from China, which accounts for 40 per cent of global copper demand — remained quiet. Copper hit a four month peak of $8346 in early February but has since struggled to gain traction. It is trading 2.5 per cent lower so far this month.

Copper slumped to a seven week low and nickel fell to the lowest level in three months after China moved to curb property speculation. Copper for delivery in three month lost as much as 0.8 per cent to $7900 a metric ton on the London Metal Exchange, the lowest since December 31. Nickel dropped as much as 1.9 per cent to $16,840 a ton, the lowest since November 28.

In the New York market copper prices extended their losses on February 20, touching a fresh one-month low, as weaker-than-expected US housing construction data and lingering worries about China’s real estate market fanned concerns about future demand.

The most actively traded contract, for March delivery, was recently down 1.10 cents, or 0.3 per cent, at $3.6385 a pound on the Comex division of the New York Mercantile Exchange. The contract touched an intraday low of $3.6315 a pound, the lowest traded price since January 17. Copper prices retreated after data showed US housing starts fell 8.5 per cent in January to a seasonally adjusted annual rate of 890,000, missing forecasts of a 3.1 per cent drop.

Still, copper’s losses were muted as traders saw some glimmers of hope in the report. December’s figures were revised upward to a rate of 973,000 new homes started.

Also, compared with a year ago, new home construction was up 23.6 per cent. Investors closely follow construction data for clues about futures demand for copper, as the metal is mainly turned into electrical wires and plumbing used in construction.

“The ongoing structural recovery in the US housing activity is set to be an important contributor to global copper demand growth (as well as market sentiment) in 2013, and should be a bullish driver of copper prices,” analysts at Goldman Sachs said in a report. The bank reiterated its forecast for copper prices to head toward $4.08 a pound within the next six months.

Overnight, copper prices had moved lower as investors continued to mull reports that China, the world’s largest copper consumer, may introduce new restrictions for its property market. Several local government instilled limits on mortgage lending to reduce speculation as property prices in major Chinese cities rose for the first time since late 2011. China accounts for about 40 per cent of global copper demand, and real estate construction is a major driver of that demand.