Commodities mixed as eurozone shakes up interest rates

Commodities diverged this week as investors digested a radical shake-up of eurozone interest rates, while cocoa hit a three-year high on speculative buying. Some markets took a hit from the strong greenback, which struck a four-month euro high as the European Central Bank cut key lending rates to all-time lows. The ECB slashed its deposit rate to -0.10 per cent. This negative rate means that banks will be charged for leaving funds at the ECB in the hope they might lend it on to businesses and consumers instead. It also cut the key lending rate to a record low of 0.15pc. The unprecedented move was aimed at bolstering fragile eurozone growth and preventing deflation, but also boosted hopes of rebounding demand for commodities. On Friday, data showed upbeat US jobs growth in May, adding a better- than-expected 217,000 jobs, stoking demand expectations in the world's biggest economy.  

Gold rally fades

PRECIOUS METALS: Gold attempted to rally following the ECB news but ran out of steam heading into the weekend. ‘Gold rallied sharply yesterday after the ECB announced its latest stimulus measures aimed at fighting deflation and spurring growth in the eurozone,’ noted Forex.com analyst Fawad Razaqzada. Gold is traditionally viewed as a safe store of value in times of higher inflation. Meanwhile, palladium hit another four-year high due to strikes in South Africa. It reached $845.60 an ounce on Wednesday, the highest point since August 2011. South Africa, which supplies nearly a third of the world's palladium, has been hit by long-running industrial action at its mines. By Friday on the London Bullion Market, the price of gold eased to $1,247.50 an ounce from $1,250.50 a week earlier. Silver increased to $19.03 an ounce from $19.00. On the London Platinum and Palladium Market, platinum slid to $1,453 an ounce from $1,464. Palladium rose to $840 an ounce from $836, according to AFP.