The volatile labour situation in South Africa – which has already resulted in production losses in platinum – aggravated on Friday with dismissal of several thousand mine workers.

According to reports, not only platinum, but also gold, iron ore, coal, chrome and diamond mines are affected by sudden labour action. Losses in platinum are estimated at close to five per cent of the global supply. There is apprehension that the ongoing developments may lead to permanent closure of some mines which will have implication for prices.

Global commodity prices recorded mixed performance last week. While platinum was up 4.2 per cent, silver edged up by a mere 0.5 per cent and gold changed little over the week in London although it hit a 11-month high with the macroeconomic situation becoming increasingly supportive. Among base metals, tin and zinc prices were up.

Front-month Brent prices continued too hover around $111 a barrel. On Friday, base metals prices closed broadly lower. The jobs data from the US were better than expected. Non-farm payroll data showed the unemployment rate in the US unexpectedly falling to 7.8 per cent in September, the lowest since January 2009.

Interestingly, among soft commodities, sugar prices on the bourses gained 10 per cent over the week to 22 cents a pound. This was attributed to a weaker dollar. The global market is still in surplus which can potentially cap the upside. India is being keenly watched for any signs of possible imports. Corn and soyabean prices have posted steep declines after hitting all-time highs. Macro-economic concerns and harvest pressure have combined to pressure the market. Crude palm oil has collapsed under the weight of its burdensome inventory to as low as Ringgit Malaysia 2,250 a tonne.

Weeks after QE3, the initial enthusiasm has given way to a realistic assessment of the market conditions. The rush for risky assets has clearly petered out. This is widely seen as the limited ability of QE3 to be the driver of market for risky assets.

Gold: The yellow metal has managed to consolidate its recent gains, but has failed to clear the $1,800-an-ounce hurdle. Improvement in equity market has led to some less-committed longs exiting gold. This was accelerated by the US non-farm payrolls data. Currency strategists believe the dollar could weaken to about 1.35 to a euro which can prove beneficial for gold.

The physical market is still weak with consumer resistance to high prices. There are reports of demand in India picking up with the price correction in the wake of the rupee gaining strength; but whether it will sustain remains to be seen. Investor demand can, of course, propel gold higher. Physical ETP holdings are rising.

In London, on Friday gold PM Fix was at $1,784/oz and silver AM Fix was at $34.85/oz, both down from the previous day. According to technical analysts, gold in euro terms is showing near-term weakness, but it is preferable to buy in dips within the greater up-move. A break above 1803 in gold will open up target of 1836 and then the 1921 highs. The medium-term outlook is said to be bullish.

Base metals: The complex is still struggling to come to terms with sluggish global growth prospects. Slowing China is a cause for concern. The world needs sustained flow of positive macro data for the base metals complex to perk up.

The technical picture suggests a bearish move for aluminium and the possibility of a break below 2055. In the event the next target would be near 2000. As for copper, 8500 area seems less likely, while below 8155 targets 8080 lows.

Crude: The market is clearly torn between weakening macroeconomic factors and heightening geopolitical concerns; which factor will dominate remains to be seen. Technically, crude may witness range trade.

A move above 113 in Brent and 93 in WTI would mean a more bullish near-term outlook toward 116 and 98 respectively. The medium-term outlook is said to be neutral.

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