Gold edged up amidst low volumes as the dollar lost ground versus the euro, with deeper concerns over the U.S. economic outlook also underpinning the metal. The U.S. currency lost some ground against a basket of six currencies but remained broadly positive, with U.S. financial markets closed on Independence Day. The concern remains as bleak jobs data and other mixed economic indicators have highlighted gold's core appeal as a harbour from risk. A combination of persistent worries from quantitative easing to Chinese remarks about currency reserve diversification would keep the dollar under pressure in months ahead and provide a backbone of support for gold.
Copper slipped after the jobs data fuelled worries about the health of the global economy and investors questioned the strength of demand from China, the world's largest copper consumer. The weak U.S. employment data knocked hopes of global economic recovery and copper could turn lower over the seasonally quiet third quarter, especially as the Chinese stockpiling drive ends. With the economy sending mixed signals, prices are exposed to a downward correction. Copper inventories in warehouses monitored by the Shanghai Futures Exchange rose 7 percent from one week earlier while LME stocks increased by 4,050 tonnes to 268,275 tonnes, having fallen more than 280,000 tonnes since end-February. Aluminium inventories rose 3,400 tonnes, to above 4.4 million tonnes.
Crude oil fell adding to a drop of nearly 4 percent the previous day, as unemployment data hardened views economic weakness would sap energy demand further and that last month's rally was overdone. Friday's trading volumes were thin as NYMEX floor trading was closed for the U.S. Independence Day holiday. Crude oil prices are struggling to sustain above $70 a barrel as the economy and energy demand were still weak and oil inventories remain high.
The latest U.S. government data showed a bigger than expected increase in stocks of motor fuel ahead of the July 4 holiday weekend, typically a time of high demand as the peak of the U.S. summer driving season. The Organization of the Petroleum Exporting Countries has said prices needed to be around $75 to spur investment and it has lowered its output targets by 4.2 million barrels per day since last September to try to support the market.
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