CHICAGO (Reuters) – Prices of gold and silver rose Friday, recouping steep losses two days ago fueled by an expected slump in demand from China, while soybeans posted a second day of gains amid continued concerns over supplies.
In other commodity markets, crude oil futures ended the day with marginal gains, supported by concerns over gasoline supplies ahead of the peak summer driving season.
COMEX silver futures roared back after two straight days of losses sparked by China’s move to take stringent measures to rein in runaway economic growth. The world’s sixth-largest economy is a major consumer of metals like copper and silver.
The slide in silver pressured gold, which fell to a seven-month low Thursday before eking out minor gains. Precious metal silver has industrial applications as well.
“Should the Chinese news which really affected all the industrial metals, really affect gold that severely? It’s being questioned,” said Paul McLeod, a vice president of precious metals at Commerzbank Securities.
Gold futures fell more than $13 Wednesday, in tandem with a meltdown in silver after Chinese Premier Wen Jiabao said the world’s most populous nation needs to “take effective and very forceful measures” to resolve its economic ills.
China, whose demand had fueled rallies in many commodities, faces resurgent inflation due to unchecked expansion in money supply, bank credit and fixed asset investment.
Precious metals were also supported Friday by the dollar’s fall against the euro, making bullion cheaper in Europe. The dollar was weighed by weaker-than-expected U.S. March personal spending and consumer sentiment reports.
COMEX June gold ended 40 cents higher at $387.50 an ounce. July silver rose 25.20 cents to $6.09 an ounce.
CBOT soybeans were higher for a second straight day after dropping sharply Wednesday amid talk that China, the world’s top importer, might have canceled several of its purchases from South America due to Beijing’s measures to tighten credit.
Fueling the rally were tight supplies in the United States, the world’s top producer and exporter, due to a drought-reduced crop last year and strong export sales earlier in the season.
There were also growing concerns over production in Brazil, the world’s second-largest grower and exporter, that has been hit with a combination of dry weather and excessive rains.
Independent analyst Safras e Mercado cut Brazil’s estimated soybean output this year to 49.97 million tonnes, down from 52.28 million in March and 56.57 million previously.
Brazil and Argentina, the world’s third-largest grower, are essentially the suppliers of soybeans to the world until this year’s crop is harvested in the United States in September.
There were also concerns emerging about crop weather conditions in the United States. Insufficient rains since late last summer have been depleting soil moisture.
“The warmer and drier weather next week will allow continued record-pace seedings but the question I have now is, are we planting into a drought?” asked private meteorologist Mike Palmerino. “My opinion right now is that we are.”
CBOT July soybeans ended 13 cents higher at $10.13 a bushel. July corn rose 1/2-cent to $3.20-1/4, while July wheat rose 3/4 cent to $3.90.
NYMEX crude oil futures ended with slim gains after a volatile session, with concerns over gasoline supplies and the violence in Iraq underpinning the market.
U.S. gasoline demand is already at 9.3 million barrels per day, about 5 percent higher than one year ago and unaffected so far by record retail prices as the summer driving season that kicks off at the end of May approaches.
Traders said the violence in Iraq and other places like top crude oil exporter Saudi Arabia has helped support prices.
Gasoline futures, which have been steadily climbing to all-time highs since April 12, also ended with small gains.
NYMEX June crude oil ended 7 cents higher at $37.38 a barrel. June gasoline rose 0.41 cent to $1.2354 a gallon, while June heating oil rose 0.19 cent to 94.49 cents a gallon.
Copyright 2004, Reuters News Service