Commodity prices mixed in volatile trading

16th September 2011, Comments 0 comments

Commodity prices were mixed this week in volatile trading as markets tracked a worsening economic outlook and rising expectations that Greece faced a default on its debt.

PRECIOUS METALS: Gold's record-breaking run upward was halted by a stronger dollar, which made the metal more expensive for buyers holding euros -- denting investor demand.

Gold is however on course this year to go above $2,000 an ounce for the first time as investors seek out the safe haven metal amid economic turmoil, consultancy GFMS forecast on Thursday.

Gold hit a record high of $1,921.15 an ounce on September 6.

"Although prices might first encounter a soft patch, gold could rally through the $2,000 mark by year-end," GFMS said in its Gold Survey 2011.

It said it expected this "to mainly arise through further growth in investment."

In recent weeks and months, gold has surged ahead as investors sought safety amid slowing economic growth, rising inflation and the eurozone debt crisis. It has also benefited from unrest in the Middle East.

The glamorous precious metal, whose two main drivers are jewellery and investment buyers, is widely regarded as a safe haven in times of economic and political uncertainty, and a good store of value amid soaring inflation.

By late Friday on the London Bullion Market, gold fell to $1,794 an ounce from $1,851 the previous week.

Silver dropped to $39.97 an ounce from $41.40.

On the London Platinum and Palladium Market, platinum retreated to $1,798 an ounce from $1,842.

Palladium decreased to $732 an ounce from $748.

OIL: Crude futures rose during a trading week dominated by a weak outlook for energy demand amid slowing economic growth.

"The global economic situation has also dampened oil demand growth," analysts at research group JBC Energy said in a market note on Friday.

This week saw both the International Energy Agency and OPEC cut their oil demand forecasts, causing crude prices to drop.

Despite the bleak demand outlook, US banking giant Goldman Sachs on Thursday forecast that Brent should hit about $130 a barrel within a year.

Prices in London closed up almost three dollars on Thursday, buoyed by a wave of market euphoria over a coordinated effort by five central banks to provide US dollars to cash-squeezed European lenders.

Sentiment got a shot in the arm after the European Central Bank announced it would, in cooperation with the central banks of the United States, Britain, Japan and Switzerland, provide three-month dollar loans.

Some European banks have run into difficulties in borrowing dollars amid concerns that contagion from the eurozone debt crisis could weaken the financial system.

The central bank announcement briefly boosted the European single currency, making dollar-priced oil cheaper for euro-using buyers.

By late Friday on London's Intercontinental Exchange, Brent North Sea crude for delivery in November stood at $113.43 a barrel compared with $112.19 for the October contract a week earlier.

On the New York Mercantile Exchange, West Texas Intermediate (WTI) or light sweet crude for October, rose to $88.11 a barrel from $86.66 a week earlier.

BASE METALS: Prices of base metals diverged.

"The economic climate is likely to lead to weaker prices in the medium term, but while the relief rally continues in equities it would not be surprising to see base metals prices get some lift," said William Adams of analyst group Fast Markets.

By late Friday on the London Metal Exchange (LME), copper for delivery in three months fell to $8,793 a tonne from $8,883 the previous week.

Three-month aluminium rose to $2,381 a tonne from $2,375.

Three-month lead dropped to $2,404 a tonne from $2,443.

Three-month tin decreased to $23,450 a tonne from $23,900.

Three-month zinc edged up to $2,198 a tonne from $2,196.

Three-month nickel advanced to $21,700 a tonne from $21,450.

COCOA: New York prices hit the lowest levels for 2011, striking $2,776 a tonne, owing to high stockpiles in Ivory Coast and Ghana.

By Friday on LIFFE, London's futures exchange, cocoa for delivery in December fell to £1,813 a tonne from £1,862 the previous week.

In New York on the NYBOT-ICE, cocoa for December slid to $2,796 a tonne from $2,905.

SUGAR: Sugar retreated on expectations that the 2011/12 season would see the first major surplus in three years.

"Despite losses in Brazil, production growth elsewhere will see global supply easily exceed demand -- by between five and nine million tonnes -- representing the first significant surplus in three years," said Macquarie bank analyst Kona Haque.

By Friday on NYBOT-ICE, the price of unrefined sugar for delivery in October slipped to 29.06 US cents a pound from 29.19 cents the previous week.

On LIFFE, the price of a tonne of white sugar for December stood at £708 compared with £767 for the October contract the previous week.

COFFEE: Coffee prices extended losses.

By Friday on NYBOT-ICE, Arabica for delivery in December fell to 262 US cents a pound from 279 US cents the previous week.

On LIFFE, Robusta for November declined to $2,043 a tonne after $2,179 a tonne.

GRAINS AND SOYA: Futures slid on expectations of lower demand in the wake of recent high prices.

By Friday on the Chicago Board of Trade, maize for delivery in December dropped to $7.05 a bushel from $7.36 a week earlier.

Wheat for December fell to $7.03 from $7.29.

November-dated soyabean meal -- used in animal feed -- retreated to $13.64 a bushel from $14.26.


© 2011 AFP

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