Gold price hits record high as key commodities rebound

11th June 2010, Comments 0 comments

The price of gold struck a record high above 1,250 dollars an ounce this week as investors nervous about the weak state of the global economy sought safety in the precious metal.

"Commodity price moves remain vulnerable to the vagaries of the changing landscape of risk appetite, movements in financial markets and fragile sentiment," said Barclays Capital analyst Natalya Naqvi.

"After weeks of downward pressure, a sense of normalcy has returned to price moves recently."

World stock markets were hit this week as investors tried to make sense of fresh European debt concerns sparked by Hungary and mixed economic data.

Comments by Hungarian officials that Budapest could be in the same boat as Greece added to the pressure, raising the spectre that already struggling European banks could be hurt by any exposure there.

PRECIOUS METALS: Gold reached an all-time high 1,252.11 dollars an ounce on Tuesday.

"Gold rallied to a new all-time high as worried investors continue to pile in to the precious metal," said Rajesh Patel, head trader at financial betting firm Spread Co.

"We are seeing continued signs of stress in the financial markets and investors, novice to expert are looking at gold now as a hedge against further turmoil."

Gold is viewed as a safe-haven investment in times of economic trouble.

Prices fell late in the week "as the euro gained traction against the dollar and equity markets gathered upward momentum as macro data continue to set the tone of trading for the precious metals," said Barclay Capital analyst Suki Cooper.

A weaker dollar boosts demand for dollar-priced commodities as they become cheaper for buyers holding rival currencies.

By late Friday on the London Bullion Market, gold prices rose to 1,220 dollars an ounce from 1,203.50 dollars the previous week.

Silver climbed to 18.31 dollars an ounce from 17.76 dollars.

On the London Platinum and Palladium Market, platinum gained to 1,539 dollars an ounce from 1,527 dollars.

Palladium advanced to 449 dollars an ounce from 440 dollars.

OIL: Crude oil prices soared, briefly topping 76 dollars on Thursday, on the back of some optimism over the economy and world energy demand, traders said.

"This week started with crude oil prices struggling, then the strong Chinese figures, the weakening US dollar and a rally in the global equity markets helped oil prices to move higher and test the 76-dollar area," said Sucden analyst Mytro Sukou.

"However, it seems that some investors do not feel much confidence for more above 76 dollars ... and were prompted to some profit-taking."

Oil had fallen in New York on Monday on concerns that weak employment will dampen economic recovery in the United States, the world's biggest energy consumer.

Sentiment was also affected by the dollar's strength, which was underlined when the euro briefly plunged to 1.1877 dollars, its lowest level for more than four years, amid the raging eurozone debt crisis.

However, oil futures surged on Wednesday as relatively upbeat comments by Federal Reserve chief Ben Bernanke and declining US stockpiles lifted the economic recovery outlook.

Stock markets rallied and the euro rebounded against the dollar as Bernanke's comments eased fears that the European debt crisis could hurt the fragile US recovery and stall the global upswing.

Bernanke said the US economy was on track to grow 3.5 percent this year as it sees only a "modest" impact from the eurozone debt crisis.

Fresh support came after the US Department of Energy said Wednesday that crude oil inventories sank by 1.8 million barrels in the week ending June 4.

That was more than double market expectations and indicated strengthening demand in the world's biggest energy consuming nation.

On Thursday, oil continued to charge higher, boosted by strong Chinese exports data and an upbeat energy demand outlook from the International Energy Agency.

China said on Thursday its trade surplus soared in May on strong foreign demand that drove exports up a whopping 48.5 percent from a year ago.

China is the world's second-biggest oil consumer after the United States, and its economic data now have a significant impact on the market for crude.

The trade figures helped ease concerns that the eurozone debt crisis would weigh on the world's third-largest economy and second-largest energy consumer, seen as the prime engine of global oil demand.

Prices were also boosted after International Energy Agency raised its estimate of global demand by 60,000 barrels per day to 86.4 million barrels per day this year, saying initial data on economic activity in advanced countries was stronger than expected.

By late Friday on the New York Mercantile Exchange, Texas light sweet crude for delivery in July leapt to 74.69 dollars a barrel from 71.78 dollars a week earlier.

On London's Intercontinental Exchange, Brent North Sea crude for July delivery soared to 75.04 dollars from 72.58 dollars.

BASE METALS: Base metals prices rose, aided by strong Chinese economic data.

China said Friday that industrial output from the country's millions of factories and workshops rose 16.5 percent in May.

"The latest data release for May pointed to still-robust demand conditions in China," said Barclays Capital analyst Gayle Berry.

By Friday on the London Metal Exchange, copper for delivery in three months climbed to 6,480 dollars a tonne from 6,292 dollars a week earlier.

Three-month aluminium gained to 1,956 dollars a tonne from 1,890 dollars.

Three-month lead increased to 1,690 dollars a tonne from 1,602 dollars.

Three-month tin jumped to 16,850 dollars a tonne from 16,000 dollars.

Three-month zinc rallied to 1,737 dollars a tonne from 1,659 dollars.

Three-month nickel advanced to 19,426 dollars a tonne from 18,125 dollars.

COCOA: Cocoa futures slid, one week after reaching 33-year highs of 2,606 pounds a tonne owing to tight supplies.

By Friday on LIFFE -- London's futures exchange -- the price of cocoa for delivery in July fell to 2,455 pounds a tonne from 2,581 pounds the previous week.

On the New York Board of Trade (NYBOT), the September cocoa contract dipped to 2,944 dollars a tonne from 2,982 dollars.

COFFEE: Coffee prices soared on worries over tight supplies.

By Friday on LIFFE, Robusta for delivery in September rallied to 1,529 dollars a tonne from 1,375 dollars the previous week.

On the NYBOT, Arabica for July jumped to 145.05 US cents a pound from 134.80 cents.

SUGAR: Sugar prices rebounded.

By Friday on the NYBOT, the price of unrefined sugar for delivery in July rose to 15.57 US cents a pound from 14.65 cents the previous week.

On LIFFE, the price of a tonne of white sugar for August gained to 512.80 pounds from 466.20 pounds.

GRAINS AND SOYA: Wheat and soya prices fell, while maize gained in volatile trade.

By Friday on the Chicago Board of Trade, maize for delivery in July rose to 3.46 dollars a bushel from 3.40 dollars the previous week.

July-dated soyabean meal -- used in animal feed -- fell to 9.33 dollars from 9.35 dollars.

Wheat for July dropped to 4.29 dollars a bushel from 4.35 dollars.

RUBBER: Malaysian rubber prices retreated on weak demand.

The Malaysian Rubber Board's benchmark SMR20 slid to 287.50 US cents a kilo on Friday from 291.45 US cents the previous week.


© 2010 AFP

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