Wall Street posted modest gains on Friday, as stocks benefited from a late rally. The choppy trading for most of the session was due to the uncertainty about the near-term outlook for the markets however, the sentiment reversed by the afternoon mainly because of the fear of missing out on further upside. Thomson Reuters and the University of Michigan released a report showing improvement in consumer sentiment in the month of June to 82.5 from the preliminary reading of 81.2 against 81.9 in May. In the meanwhile, European stocks faded in the final hours of trading Friday; mainly because of dampened sentiments among investors as a European Commission survey found there was a decline in confidence in the region among businesses and households in June.
Precious metals also eased most of the session on Friday only to recover just before the close to just a tab below the 1320 price level. This morning traders are booking profits as gold eased by $3.70 to exchange at 1316.30. Silver is trading its cues from gold this morning giving up 202 points trade at 20.932. The weekend was quite uneventful when it came to precious metal drivers. Tensions in Iraq remain on high alert but seem to be under control as Iraq continues to be able to export petroleum with no problems from the violence.
At the start of the last week, gold prices traded near its two-month high of $1,321.90 on weak US equities and increasing violence in Iraq. The yellow metal climbed as investors switched out of equities after Germany’s Ifo index of business sentiment fell more than expected in June. Gold later pared gains on encouraging U.S. new home sales and better consumer confidence data. Bullion prices rose on fears the Iraq conflict could escalate and a perceived lack of commitment by the Federal Reserve to raise interest rates, triggering a heavy bout of short covering.
Another report last Thursday showed the number of Americans seeking unemployment benefits fell again last week. Prices came under pressure on comments from St. Louis Fed President James Bullard that interest rate increases should come sooner rather than later. This week’s main event will be the US nonfarm payroll report released on Thursday.
Strength in the base metals complex on account of optimism in the US and Chinese economy also pushed the metals higher at the end of last week with copper trading at 3.163. Copper remained in the green as the new week started adding 2 points. Copper prices gained 1.7 percent last week taking cues from decline in inventories which fell by around 2.6 percent to the lowest levels since 2009. Also, favorable manufacturing data from the US and China added an upside to the prices.
However, Federal Reserve official signaled U.S. interest rates could rise by March capped sharp gains. China’s imports of refined copper fell 17 percent to 282,969 tons in May pointing towards falling demand of the red metal. Also, speculation of further drop as the Qingdao investigation may curb purchases from abroad by traders who use commodities as collateral to get loans gained traction.