Commodities: Profit taking seen on gold ahead of North Korean risk

Saturday sees North Korea celebrate it's founding day, where it is expected to conduct another missile test.

In preemptive positioning, gold saw some profit taking on Friday as investors decided to cash in on the 1.7% appreciation this week.

On the day, the precious metal traded 0.19% lower to $1,346/oz. with the December contract up to $1,351/oz.

Among the other precious metals, spot silver lost 0.23% to $18.02/oz while platinum was down to $1,009/oz. and palladium traded 2.18% lower to $937/oz..

Palladium is used in catalytic converters that curb pollution from vehicle exhausts and is trading near its highest level since 2001. But car output in China and the United States is falling and shortages of metal are unlikely, said Capital Economics analyst Simona Gambarini in a note.

In the base metal arena, spot copper fell victim to major profit-taking, surrendering 2.28% to trade at $6,715/tonne, as analysts said a 20% price increase since June was not justified given that China's copper imports had been stable over the past four months.

Commerzbank's head of commodities research Eugen Weinberg said copper prices had risen too far, given the Chinese figures had just remained stable.

"The price is fundamentally unjustified and we remain bearish on copper," he said, after copper prices recorded their longest winning streak since a nine-week rise in 2006.

A view not necessarily shared by UBS, with analyst Daniel Morgan stating, "In the months ahead there might be a lift in metal imports... if there is a restriction on smelter production due to environmental inspections, that would be bullish for copper."

Energy markets saw a drop in oil for both the WTI December contract and January benchmark brent, down 1.6% to $49.13/barrel and 0.88% to $53.82 respectively, with risk appetite firmly in check going into the weekend.

Royal Dutch Shell on Friday said it has suspended some of its well operations and reduced staff at its eastern Gulf of Mexico assets as a precautionary measure ahead of Hurricane Irma, which has so far claimed 19 lives.

Investors continued to track Hurricane Irma, bearing down on Florida even as Texas struggles with the devastation caused by Hurricane Harvey which economists have said could weigh on US economic growth for the third quarter.

"Hurricanes can have a lasting effect on refinery and industry demand," said Eugen Weinberg, head of commodities research at Commerzbank in Frankfurt. "The impact of the forces of nature on US oil production should not be overestimated – nor should their impact on demand be underestimated."

Soybeans were on track for their third straight week of gains, which would be the longest streak since a four-week stretch of higher closes that ended in late October 2016.

The November contract for soybeans was lower on the day to $9.66/bushel.

The US Department of Agriculture said on Friday morning that private exporters reported the sale of 264,000 tonnes of soybeans to China for delivery during the 2017/18 marketing year, the biggest flash sale in 2-1/2 weeks.

"Soybeans are likely to get even firmer as China's demand is surprising," said Ole Houe, an analyst with brokerage IKON Commodities in Sydney.

In other agriculturals, March corn was relatively flat on the day at $3.69/bushel and New York December cotton was up 1% to $0.7519/lb.

In a note to clients, Bruce Knorr at Farm Futures said, "Corn prices are a little higher, trying to rebound after a late selloff dented the mood on Thursday."