Wheat and gold post big gains as copper tumbles

New York: Wheat charged higher on Friday to post its biggest weekly gain in 16 years and gold continued its recovery from four-month lows as commodity markets saw selective buying amid lingering worries about the Eurozone.

Prices of crude oil and copper — two of the biggest industrial commodities — remained weak amid uncertainties posed by fresh elections looming in Greece and a cut in the credit ratings of 16 Spanish banks by Moody's.

Leaders of major industrial economies were due to meet to try to head off a full-blown crisis in Europe where fears are growing that Greece could leave the Eurozone bloc, threatening the future of the common currency.

"Given how critical the situation is in Europe at present, policymakers may well feel the need to come up with something to soothe the markets and the possibility of that might lead to some book squaring ahead of the weekend," Fastmarkets said in a note.

Slowdown fears

Worries about a slowing economy in China — the world's largest metals importer and a giant consumer of many other raw materials — further clouded the demand outlook for commodities, analysts said.

Copper prices fell 4 per cent on the week.

Copper futures in London had their biggest weekly decline since December, settling below the level of $8,000 (Dh29,378) a tonne critical for the confidence of market bulls.

While many expected copper prices to test new lows in coming days, some braced for the odd rebound that could surprise.

"Next week is a tough call, but my gut feeling is that we'll see slightly higher prices because we've gone too far on the downside," said Stephen Briggs, metals strategist for BNP Paribas in London.

The 19-commodity Thomson Reuters-Jefferies CRB index edged higher after the relative outperformance of wheat, gold and a few other markets such as corn and cocoa.

On a weekly basis, however, the CRB closed down for a third week, weighed down by the multi-month lows in oil and copper.

US wheat futures had their biggest gain since 1996 as hot and dry weather kept fears simmering about crop losses in the US Plains and Russia.

"Wheat is a weather market right now," said Jack Scoville, analyst for brokers TPFG in Chicago.

Weather impact

Crop experts said the promise of a bumper harvest for US hard red winter wheat was eroding by the hour as scorching weather and high winds in important growing areas of the US Plains sapped soils of needed moisture.

Benchmark wheat for July on the Chicago Board of Trade settled at $6.95-1/4 a bushel, up 37-1/2 cents, or almost 6 per cent for the day.

For the week, wheat was up almost $1 a bushel, or 16 per cent. Reuters data showed that was the biggest weekly gain since 1996 for a front-month CBOT wheat contract on a spot continuation basis.

Strong rebound

Gold jumped, posting its biggest weekly gain in a month.

The spot price of gold, which tracks trade in bullion, hovered just above $1,590 an ounce, up $17 on the day.

After sinking this month during three-fourths of the trading sessions and breaching various technical low points as investors sold the precious metal to cover losses elsewhere, the market popped up on Thursday by nearly $35.

Despite sharp declines from Monday through Wednesday, the two-day rally put the spot price of gold up 0.8 per cent for the week — its biggest weekly rise since mid-April.