Most commodities rose on the last trading day of the week on Friday, even as oil was headed for a steep weekly loss.
Gold prices were hovering near their record highs on Friday as the yellow metal was set for its seventh consecutive weekly gain.
Copper prices also rose more than 1% on Friday due to reports about production outages.
Silver prices had briefly breached the $48 per ounce mark on COMEX on Thursday before profit taking dragged the metal back to $47.
Gold shines
Following the start of the US government shutdown on Thursday, gold prices have continued their ascent, reaching an unprecedented high.
“Gold is in demand as a safe haven, partly because the shutdown in the US has added another factor of uncertainty,” Barbara Lambrecht, commodity analyst at Commerzbank AG, said in a report.
“Even if the extent of the price increase gives cause for skepticism, there is no end in sight to the upward trend.
Various public and private data sources suggest that the US job market experienced stagnation in September. Hiring remained sluggish, and unemployment rates showed no change.
According to CME Group’s FedWatch tool, investors anticipate a 97% chance of a 25-basis-point rate cut in October, with an 88% probability of a similar reduction in December.
“Although, as has been noted repeatedly over the past month or so, the daily MACD continues to indicate that the market is overbought,” said David Morrison, senior market analyst at Trade Nation.
At the time of writing, the December gold contract on COMEX was at $3,910.87 per ounce, up more than 1%.
Oil gains but set of weekly losses
Oil prices rose on Friday but were still headed for a weekly decline of around 7-8%, following reports of possible OPEC+ supply hikes.
Brent crude recorded an 8.3% drop for the week, while WTI was set to decline by 7.7%.
The Organization of the Petroleum Exporting Countries and allies may increase oil production in November by 274,000-411,000 barrels per day (bpd), a two to three-fold rise compared to October’s increase.
This potential move by eight OPEC+ members, as reported by Reuters on Tuesday, indicates Saudi Arabia’s efforts to regain market share.
OPEC posted on social media that nothing had been decided yet. All eyes will be on the meeting over the weekend.
“However, a big move cannot be completely ruled out, as oil prices are still relatively high and Saudi Arabia apparently wants to increase its market share,” Lambrecht said.
JPMorgan analysts anticipate a significant shift in the oil market, projecting a substantial surplus beginning in the fourth quarter and extending into next year, marking September as a pivotal turning point.
Elsewhere, on Friday, a fire erupted overnight at Chevron’s El Segundo refinery, a major facility on the US West Coast with a capacity of 290,000 barrels per day.
While the immediate impact on production remains uncertain, analysts anticipate a limited effect on oil prices.
The price of West Texas Intermediate crude was at $60.78 a barrel, up 0.5% from the previous close. Brent crude was at $64.42 per barrel, up 0.5% as well.
Base metals
This week, the London Metal Exchange (LME) index shows that base metal prices have reached a 15-month high.
Lambrecht noted:
Against the backdrop of weaker growth in the major sales markets of China and the US, this may come as a surprise to some.
Metal prices are influenced not only by demand but also significantly by supply developments. This interplay between demand and supply is likely a key factor behind the divergent trends observed in metal prices.
Copper prices on the LME have increased by nearly 17% since the start of the year. In contrast, nickel and zinc prices are currently trading slightly below their levels at the beginning of the year.
The closure of Indonesia’s Grasberg mine, the world’s second-largest copper mine, has resulted in a “theoretical” monthly market shortfall of 66,000 tons, given its annual production capacity of 800,000 tons.
Chile’s copper production for August was disappointing, experiencing a nearly 10% year-on-year drop, equivalent to 47,000 tons.
This was largely due to disruptions at El Teniente, the world’s tenth-largest copper mine, with an annual capacity of around 400,000 tons.
The three-month copper contract on the LME was at $10,647.05 per ton, up 1.5% from the previous close.
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