Gold zooms to record peak, coffee scores 12-year high
Gold rocketed to an all-time high this week after China announced that it would relax its currency's peg to the dollar, while coffee scored a 12-year peak on the back of tight supplies.
China's central bank, the People's Bank of China, said last weekend that it would allow the yuan more flexibility against the US currency, sparking expectations of higher demand for dollar-priced raw materials.
After initial gains on the China news, many commodities slid as downbeat US data highlighted a faltering American economy and sparked questions about the outlook for demand in the world's biggest energy consuming nation.
The US economy grew at a weaker-than-expected 2.7 percent rate in the first quarter, a third and final revision from the US Commerce Department showed on Friday. The reading undershot forecasts of 3.0-percent expansion.
PRECIOUS METALS: The price of gold soared to a new historic record of 1,265.30 dollars per ounce at the start of the week.
"Gold opened Monday in a steady mood, holding ground above 1,255 across the early part of the day and setting a fresh peak of 1,265.30," said analyst James Moore at specialist metals website TheBullionDesk.com.
He added: "China's decision to relax the yuan's peg against the dollar sparked a jump in risk appetite, triggering gains in stocks and also commodities on speculation the move will increase demand for raw materials.
"Speculation (that) the currency move by China could boost car sales lifted platinum and palladium to their best levels in a month."
The precious metal, whose two main drivers are jewellery and investment buyers, is viewed as a safe-haven investment in times of economic uncertainty.
"Safe-haven buying remains ripe," added Barclays Capital analyst Suki Cooper.
By late Friday on the London Bullion Market, gold prices were at 1,254 dollars an ounce from 1,256 dollars the previous week.
Silver eased to 18.65 dollars an ounce from 18.77 dollars.
On the London Platinum and Palladium Market, platinum slipped to 1,549 dollars an ounce from 1,578 dollars.
Palladium declined to 466 dollars an ounce from 484 dollars.
OIL: Crude oil had rallied on Monday after China announced that it would relax the yuan's dollar peg, and also ended the week higher on supply fears about stormy weather in the Caribbean.
The booming export-geared Chinese economy is leading the global recovery from recession and is considered the key driver of energy demand as the world's second-largest oil-consuming nation, after the United States.
The oil market pulled back on Tuesday as renewed economic recovery concerns resurfaced.
Those worries were reignited after a report showed US existing-home sales slumped unexpectedly in May and a credit ratings downgrade by Fitch on French bank BNP Paribas shook confidence in the European banking sector.
On Wednesday, oil plunged on news of higher-than-expected US reserve estimates and further signs of a limited economic recovery.
The US Department of Energy said Wednesday that American crude reserves soared by 2.0 million barrels in the week to June 18, indicating weaker demand for energy.
That surprised the market because expectations had been for a large drop of 1.0 million barrels.
In addition, data showed Wednesday that sales of new single-family US homes plunged almost 33 percent in May to a record low.
The US Federal Reserve, meanwhile, raised concerns about the strength of the American economy's recovery from recession, and suggested the European debt crisis was taking its toll.
Heading into the weekend, oil bounced higher on Friday on hopes for a seasonal rise in gasoline (petrol) demand and concerns over a potential tropical storm developing in the Caribbean.
By late Friday on the New York Mercantile Exchange, Texas light sweet crude for delivery in August rose to 78.55 dollars a barrel from 77.26 dollars for the July contract one week earlier.
On London's Intercontinental Exchange, Brent North Sea crude for August delivery eased to 78.00 dollars from 78.49 dollars.
BASE METALS: Base metal prices mainly rose, boosted by positive news from China.
"Prices ... are showing a firmer tendency contrary to the negative trend of other commodities," said Commerzbank analysts.
"The main reason for this rise is the announcement of China's Ministry of Finance that export incentives for a number of raw material and steel products are to be abolished. The current export-tax rebates on many metals and steel would be removed.
"This measure, effective from 15 July, could lead to a significant decline in exports from China and tighten global supply. On the other hand, more material would remain in China itself, which could put pressure on local commodity prices."
By Friday on the London Metal Exchange, copper for delivery in three months rose to 6,630 dollars a tonne from 6,365 dollars a week earlier.
Three-month aluminium edged up to 1,976 dollars a tonne from 1,960 dollars.
Three-month lead increased to 1,818 dollars a tonne from 1,735 dollars.
Three-month tin jumped to 18,025 dollars a tonne from 17,575 dollars.
Three-month zinc gained to 1,839 dollars a tonne from 1,743 dollars.
Three-month nickel eased to 19,400 dollars a tonne from 19,540 dollars.
COFFEE: Coffee surged to a 12-year pinnacle in New York, propelled by simmering worries over tight supplies.
"Prices ... are at their loftiest level in 12 years, with continued concerns on low stocks and supply tightness from Central America outweighing expectations of a record Brazilian harvest in the second half," said Barclays Capital analyst Sudakshina Unnikrishnan.
In New York, Arabica for September jumped to 176.50 US cents a pound -- striking a level that was last seen in February 1998.
Macquarie analyst Kona Haque added: "The arabica market is very tight due to crop shortfalls in the Americas, and futures prices are finally reflecting this."
By Friday on LIFFE -- London's futures exchange -- Robusta for delivery in September jumped to 1,667 dollars a tonne from 1,560 dollars the previous week.
On the New York Board of Trade (NYBOT), Arabica for July advanced to 167.30 US cents a pound from 160.55 cents.
COCOA: Cocoa futures bounced higher.
By Friday on LIFFE, the price of cocoa for delivery in September rose to 2,492 pounds a tonne from 2,326 pounds the previous week.
On the NYBOT, the September cocoa contract gained to 3,119 dollars a tonne from 2,956 dollars.
SUGAR: Sugar prices staged an impressive rally on the back of keen demand for the raw material.
"Strong physical demand and a Brazilian harvest that is just gathering pace will support prices in the short term," added Haque.
By Friday on the NYBOT, the price of unrefined sugar for delivery in July jumped to 16.25 US cents a pound from 15.36 cents the previous week.
On LIFFE, the price of a tonne of white sugar for August rallied to 542.80 pounds from 501 pounds.
GRAINS AND SOYA: Maize, soya and wheat prices beat a retreat.
By Friday on the Chicago Board of Trade, maize for delivery in December slid to 3.64 dollars a bushel from 3.80 dollars the previous week.
November-dated soyabean meal -- used in animal feed -- dipped to 9.14 dollars from 9.30 dollars.
Wheat for September declined to 4.73 dollars a bushel from 4.77 dollars.
RUBBER: Malaysian rubber prices rose for the second straight week.
The Malaysian Rubber Board's benchmark SMR20 rose to 292.05 US cents a kilo from 288.20 cents a week earlier.
© 2010 AFP