Commodities rocked by Cyprus crisis
"Gold prices have firmed as events in Cyprus have unfolded this week, but the base metals complex and oil prices have come under pressure," said Barclays analyst Suki Cooper.
"A recovery in investor risk appetite is passing commodities markets by. The growth outlook is still not strong enough to support the kind of broad-based pick-up already seen in many other asset classes."
Cyprus is locked in emergency talks with a troika of lenders to save the eurozone member's banking system and economy in general from ruin, and the option of a tax on bank deposits back on the table.
The European Union has given Nicosia until Monday to raise 5.8 billion euros ($7.47 billion) to unlock loans worth 10 billion euros or face being choked from European Central Bank emergency funding in a move that would bankrupt the island.
OIL: World crude prices sank as fears intensified over Cyprus. The market also fell as traders banked profits despite strong manufacturing data in China, which is the world's biggest consumer of energy.
The European Central Bank warned on Thursday it was ready to pull the plug on emergency funding for Cyprus banks as the island's politicians scrambled to raise billions of euros to head off financial meltdown.
In another blow to sentiment, the eurozone Purchasing Managers' Index (PMI), published by London-based Markit, showed that the German economy was starting to be affected by the problems in the rest of Europe and that the French slowdown was accelerating.
Overall the eurozone PMI, a leading indicator of growth, fell to four-month low of 46.5 points in March against 47.9 in February.
"Concerns about demand for oil intensified following the release of disappointing eurozone PMI readings and after the ECB issued an ultimatum to Cyprus to come up with a bailout plan by Monday or else it would suspend its provision of emergency liquidity," said GFT analyst Fawad Razaqzada.
Prices had rallied in New York on Wednesday after the US Department of Energy reported an unexpected decline of 1.3 million barrels in oil stocks in the week ending March 15.
That confounded market expectations for a large gain of 1.7 million barrels, suggesting stronger-than-expected demand in the United States, which is the world's top crude consumer.
Crude futures were also strengthened by the Federal Reserve's widely expected move to maintain its stimulus programme on Wednesday.
On Thursday, meanwhile, figures from HSBC bank showed that manufacturing activity in China, the world's largest energy user, improved in March after expanding at its slowest pace in four months in February -- lifting hopes for a pick-up in the world's number two economy.
The bank's preliminary Chinese PMI, a widely watched barometer of the health of the Asian powerhouse economy, came in at 51.7 for the month from 50.4 in February. A reading above 50 points to growth while anything below indicates contraction.
By late Friday on London's Intercontinental Exchange, Brent North Sea crude for delivery in May slid to $107.13 a barrel compared with $109.90 a week earlier.
On the New York Mercantile Exchange, West Texas Intermediate (WTI) or light sweet crude for May reversed to $92.65 a barrel from $93.48 for the expired April contract one week earlier.
PRECIOUS METALS: Precious metal gold gained ground, winning support from its long-held status as a safe-haven investment in times of economic turmoil.
"The yellow precious metal remains well-supported thanks to the ongoing uncertainty over Cyprus," said Commerzbank analysts in a note to clients.
"The ECB has announced that it will cease providing Cypriot banks with emergency funding from Tuesday if no agreement is reached with the Troika (comprising the ECB, International Monetary Fund and European Union) on a bailout programme.
"Now that the Mediterranean country's negotiations with Russia concerning financial aid have also collapsed, time is running out for Cyprus. Even though our economists continue to believe that a last-minute solution is still the most likely outcome, the risk of national bankruptcy has increased."
By late Friday on the London Bullion Market, the price of gold grew to $1,607.75 an ounce from $1,595.50 a week earlier.
Silver gained to $29.06 an ounce from $28.91.
On the London Platinum and Palladium Market, platinum eased to $1,580 an ounce from $1,593.
Palladium slid to $754 an ounce from $774.
BASE METALS: Base or industrial metal prices were also dented by worries centred on Cyprus.
"Base metal prices sold off again over the past week, as macro tail risk concerns mounted in relation to the Cyprus bailout," said Barclays analyst Gayle Berry.
"In the short term, this will likely continue to drive performance, although we believe that conditions in China - which had been market participants' main pre-occupation, before this week's events in Europe - have started to offer signs of sustained improvement."
By late Friday on the London Metal Exchange, copper for delivery in three months fell to $7,685 per tonne from $7,770.50 one week earlier.
Three-month aluminium edged down to $1,945 per tonne from $1,968.75.
Three-month lead declined to $2,186 per tonne from $2,226.25.
Three-month tin dipped to $22,850 a tonne from $23,900.
Three-month nickel eased to $17,085 a tonne from $17,115.
Three-month zinc dropped to $1,955 per tonne from $1,964.25.
COCOA: Cocoa futures headed higher on growing hopes of a supply deficit.
"Expectations that there will be a cocoa supply deficit in 2012/13, with the International Cocoa Organisation putting this at 45,000 tonnes ... supported prices and should continue to keep a firm floor under the market," said Public Ledger analysts.
By Friday on LIFFE, London's futures exchange, cocoa for delivery in May rose to �1,459 per tonne from �1,443 a week earlier.
On New York's NYBOT-ICE exchange, cocoa for May increased to $2,176 per tonne from $2,140.
COFFEE: Prices drifted lower on the back of abundant supplies, and despite ongoing worries over a tree fungus that has ravaged crops in Central America. Leaf rust has caused coffee trees to produce fewer and lower-quality beans.
"Alongside the generally negative market sentiment, it is the plentiful supply that is weighing on prices," said Commerzbank analysts.
"The coffee stocks certified by the ICE climbed to a three-year high of 2.75 million bags yesterday. Coffee producers in Brazil are already withholding supply in a bid to shore up prices."
By Friday on LIFFE, Robusta for May delivery eased to $2,157 a tonne from $2,174 a week earlier.
On NYBOT-ICE, Arabica for delivery in May fell to 133.85 US cents a pound from 139.10 cents.
SUGAR: Prices retreated further as the market was also weighed down by high supply levels.
"With large crops last year in Brazil, continued global surpluses and lingering macroeconomic uncertainty, both sugar and coffee prices have fallen over 20 percent in the past 12 months," noted analyst Christopher Narayanan at Societe Generale.
By Friday on LIFFE, the price of a tonne of white sugar for delivery in May retreated to $529.70 from $538.80 a week earlier.
On NYBOT-ICE, the price of unrefined sugar for May decreased to 18.26 US cents a pound from 18.86 cents.
RUBBER: Prices recovered in anticipation of further easing from Japan's central bank while the US Federal Reserve continued its monetary stimulus.
The Malaysian Rubber Board's benchmark SMR20 rose to 275.85 US cents a kilo from 271.30 cents the previous week.
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