Oil, gold prices drop amid China rate-hike fears
Oil and gold prices slid this week, in part due to worries that China could soon raise interest rates to tame its high inflation -- fears that also weighed on copper after it struck a record high.
"Prices came under pressure as the dollar strengthened, concerns resurfaced over further monetary policy tightening in China, equity markets eased and US macro data were mixed," said analysts at Barclays Capital
Commodities-hungry China could raise interest rates around the Lunar New Year early next month to combat rising inflation during the first half, state media said on Friday.
A day earlier, China said its consumer price index increased 4.6 percent in December compared with a year earlier and rose 3.3 percent for all of 2010, exceeding the government's full-year target.
OIL: Crude oil prices sank this week after news of an unexpected rise in US crude reserves and on fears that China would take action to cool its robust economic growth, paring energy demand.
"The recent fundamentals, with large builds in oil inventories and ongoing concerns that China might raise interest rates, triggered long liquidation (selling)," said Sucden Financial analyst Myrto Sokou.
"Investors might be cautious, as crude oil prices are likely to trade sideways, struggling for some clear direction in the short term."
US crude oil stockpiles climbed 2.6 million barrels to 335.7 million barrels last week. Analysts had forecast a drop of 900,000 barrels in the week to January 14 for the United States, the world's biggest oil consumer.
The oil market also fell after almost reaching $100 a barrel last week, for the first time since October 2008, following news of a temporary shutdown of the Alaskan pipeline.
The resumption on Monday of oil flowing through the massive Trans-Alaska Pipeline, after more than a week's shutdown following a leak, took pressure off the market. The pipeline carries about a tenth of US crude production.
By Friday afternoon on London's Intercontinental Exchange, Brent North Sea crude for delivery in March sank to $96.86 a barrel compared with $98.65 for the February contract a week earlier.
On the New York Mercantile Exchange, Texas light sweet crude for March delivery dropped to $89.36 a barrel compared with $91.23 for the February contract.
PRECIOUS METALS: Gold prices slipped but palladium, which is used in the manufacture of catalytic converters, reached a decade-high at $828 an ounce.
"China is again proving to be the driver of demand" for palladium, said analysts at Commerzbank.
Gold had hit a record 1,431.25 dollars on December 7, boosted by its safe-haven status as investors fretted over the eurozone debt crisis.
By late Friday on the London Bullion Market, gold fell to $1,343.50 an ounce from $1,367 a week earlier.
Silver dropped to $27.14 an ounce from $28.27.
On the London Platinum and Palladium Market, platinum edged up to $1,817 an ounce from $1,811.
Palladium jumped to $814 an ounce from $795.
BASE METALS: Copper prices hit a fresh record high at $9,781 and tin an all-time peak at $27,720 a tonne. Copper failed to hold onto its gains however in the wake of the Chinese inflation data.
Copper and tin have been breaking records in recent weeks amid strong Chinese demand and supply disruptions.
But late this week, "metal prices came under substantial pressure ... against the backdrop of China possibly implementing further measures to cool the local economy and fight inflation," said analysts at Commerzbank.
By late Friday on the London Metal Exchange (LME), copper for delivery in three months dropped to $9,485.75 a tonne from $9,640 a week earlier.
Three-month aluminium slipped to $2,433 a tonne from $2,470.
Three-month lead fell to $2,454 a tonne from $2,668.
Three-month tin jumped to $27,720 a tonne from $26,750 a week earlier.
Three-month zinc declined to $2,333.50 a tonne from $2,455.
Three-month nickel grew to $26,180 a tonne from $25,747.
COCOA: Cocoa prices struck a one-year high of $3,250 a tonne in New York on supply concerns due to political unrest in Ivory Coast.
"The background here was the failed talks of the African Union on a friendly solution to the political crisis in the world's biggest cocoa producing country, Ivory Coast," Commerzbank analysts said in a note to clients.
West African armies are ready to intervene in the Ivory Coast, where Laurent Gbagbo has refused to give up the presidency, and only need the political nod to go ahead, a Nigerian general said on Thursday.
West African nations have threatened to send in troops to dislodge Gbagbo who has refused to step aside after a November 28 presidential election that the election commission says he lost.
By Friday on LIFFE, London's futures exchange, cocoa for March jumped to £2,160 a tonne from £1,979 a week earlier.
On the New York Board of Trade (NYBOT), cocoa for delivery in March rallied to $3,237 a tonne from $2,990 a week earlier.
COFFEE: Coffee prices edged higher but failed to secure fresh multi-year highs that were struck recently owing to tight supplies.
By Friday on NYBOT, Arabica for delivery in March gained to 238.95 cents a pound from 233.85 cents a week earlier.
On LIFFE, Robusta for March grew to $2,154 a tonne from $2,116 a week earlier.
SUGAR: Sugar futures rallied but not enough to reach fresh 30-year highs amid strong Asian demand.
By Friday this week on NYBOT, the price of unrefined sugar for delivery in March grew to 31.97 US cents a pound from 30.88 cents a week earlier.
On LIFFE, the price of a tonne of white sugar for March increased to £787.80 from £770.20 a week earlier.
GRAINS AND SOYA: Soya futures fell and maize and wheat each rose as the market reacted to rainfall in major crops producer Argentina.
"The damage is already done for corn in Argentina, they are going to have a short crop, whereas for soybeans if we get more moisture they can bounce back," said analyst Don Roose at traders US Commodities.
By Friday on the Chicago Board of Trade, March-dated soyabean meal -- used in animal feed -- dropped to $14.19 a bushel from $14.22 a week earlier.
Maize for delivery in March gained to $6.62 a bushel from $6.48.
Wheat for March increased to $8.23 from $7.73.
© 2011 AFP