NEW YORK Lukewarm U.S. economic readings on Friday left many investors questioning the strength of the U.S. recovery and buying more gold as a safe haven, sending that precious metal to its second consecutive weekly gain, but oil and copper fell on fears demand could wane.
"I think what you're seeing now is traders questioning whether or not this economy is going to dip into another leg lower," said Adam Klopfenstein, senior market strategist with Lind-Waldock.
The mixed performance of commodities left the RJ/CRB index .CRB essentially flat. The global benchmark comprised of 19 commodities, dipped 0.04 percent to 268.79, by the end of trading on Friday. (Graphic: link.reuters.com/kyv37m)
Gold gained for two straight weeks for the first time since June, ending well above the key $1,200 an ounce level, around which it pivoted for much of the week. Signs of economic slowing bolstered the precious metal's safe-haven appeal.
"A lot of people are starting to embrace the fact that gold had a substantial move above $1,200, solidifying another possible move to the upside," said Klopfenstein.
U.S. retail sales climbed 0.4 percent in July in a hopeful sign for the economy, but the gains were concentrated in auto and gasoline station sales, suggesting underlying momentum in consumer spending remained tame.
"The softness was relatively broad based, the consumer is pulling back in a number of fronts. There's no sign of a consumer collapse, but no sign of a robust recovery," said Zach Pandl, economist at Nomura Securities in New York.
U.S. consumer sentiment inched up in early August from July, while business inventories rose in June to their highest level in a year, but sales fell, suggesting demand may have been weaker than firms anticipated.
"Most reports came in slightly better than expected though the upside wasn't that great," said Bruce Bittles, chief investment strategist at Robert W. Baird & Co in Tennessee.
U.S. crude oil futures ended lower as fears the economic recovery was stalling prompted oil investors to extend a sell-off to the fourth straight session.
Copper finished down, suffering its first weekly loss in four weeks, as sentiment soured in response to the string of disappointing economic releases.
A rallying dollar also weighed down oil and metals and kept a lid on gold's gains. The dollar chalked up its best week in nearly two years against major currencies as the tepid consumer data fed fears that slower U.S. growth would hurt the world economy. That fear boosted a safe-haven bid for the greenback.
U.S. wheat prices fell 1.5 percent in a late-session bout of profit-taking that more than offset support from worries that a Black Sea region drought will leave a third of Russia's land fallow until next spring. Many traders wanted to lighten their load due to recent volatility in wheat prices, which soared to two-year highs last week before tumbling in four of the past six trading sessions.
Soybean prices jumped 1.7 percent on brisk export demand and hot U.S. Delta weather that was stressing the crop in its pod-setting stage of development. Corn advanced 1.4 percent.
After a late rally in ICE raw sugar it closed at a two-week peak, with support from physical demand and dwindling prospects in drought-ridden Russia and flooded Pakistan. Damage to both countries' sugar output has already forced them to buy from the international sugar market to meet domestic demand.
(Reporting by Carole Vaporean; Editing by David Gregorio)