Higher Gold Prices Reflect Hedge Against Uncertainty

Another volatile week ended with a whimper as investors decided to give up on risky investments ahead of the week-end. Fear of additional missile attacks by western nations on Syria fueled most of the selling pressure. The markets also continued to remain jittery over a possible escalation of trade tensions between the United States and China.

Copper

Copper prices recovered a little of its 1.9 percent loss from the previous session. That move was fueled by general weakness across the industrial metals sector. A huge drop in zinc prices, triggered by massive sales from commodity and hedge funds, helped fuel some of the selling in copper.

Losses may have been limited by a strong performance in aluminum, which posted its best week in 38 years in response to the U.S. imposing sanctions on Russia’s UC Rusal, the world’s second biggest producer of the metal. This helped raise supply concerns.

Throughout the week, copper was underpinned by a weaker U.S. Dollar which helped drive up foreign demand for the dollar-denominated futures contract. Trader sold the dollar in response to geopolitical tensions in the Middle East.

Additionally, copper was also supported by comments from Rio Tinto’s copper chief, Arnaud Soirat. He said the copper market will slip into a deficit in the 2020s after being in balance for the rest of the decade.

Gold

Gold futures finished higher on Friday while posting its second consecutive higher weekly close. The catalyst behind the strength was uncertainty over Western military action in Syria.

The market was underpinned throughout the session in response to reports that U.S. President Donald Trump and his national security aides had discussed options on Syria on Thursday. However, gains were limited after Trump tweeted that a U.S. attack “could be very soon or not so soon at all.” This cast some doubt over the timing of his threatened strike, leading some buyers to lighten up on their long positions.

Crude Oil

U.S. West Texas Intermediate and international-benchmark Brent crude oil hit three year highs on Friday while posting their biggest weekly gains since July. Traders became more concerned about the possibility of a supply disruption in the area after President Trump’s comments about possible military action in Syria. The markets were also underpinned by reports of dwindling global oil stocks.

Natural Gas

Natural gas futures finished the trading session higher as investors continued to respond to Thursday’s bullish U.S. Energy Information Administration’s weekly storage report for the week-ending April 6 which showed a bigger than expected weekly draw. Traders also priced in another week of withdrawals due to lingering cold in several key demand areas.