Gold hits record high as traders seek safety

29th July 2011, Comments 0 comments

Gold hit a record high as traders sought out safe-haven investments amid mounting debt tensions in the United States and lingering concerns over high deficits for eurozone members.

PRECIOUS METALS: Gold reached an all-time peak of $1,632.80 an ounce on Friday, extending the precious metal's recent record-breaking run on the London Bullion Market.

"The threat of default by the world largest economy has led gold to a fresh peak," said James Moore, an expert at commodities analysis group FastMarkets.

US President Barack Obama on Friday warned that his country was almost out of time to agree a debt ceiling deal as Republicans and Democrats scrambled to find a way out of an impasse and avoid a disastrous default.

With just days to go until the United States could be pushed into an unprecedented default, Obama insisted the warring sides could still reach an 11th-hour compromise on raising the $14.3 trillion debt ceiling.

"This is not a situation where the two parties are miles apart," Obama said despite a months-long bitter war of attrition now going down the wire to a Tuesday deadline when the US is set to run out of money to pay its bills.

"Should a default occur, gold will be vulnerable to a sharp correction as investors cut their risk exposure and use gold to generate cash, but ... once the initial sell-off is complete there are likely to be further upside gains," added Moore.

In recent weeks, gold has blazed a record-breaking trail as investors have also sought shelter from the intensifying eurozone debt crisis.

This week among other precious metals, silver reached $41.45 an ounce, close to a three-month high, before easing on profit-taking. Palladium struck a five-month peak at $846 an ounce.

By late Friday on the London Bullion Market, gold jumped to $1,628.50 an ounce from $1,602 the previous week.

Silver eased to $39.63 an ounce from $39.67.

On the London Platinum and Palladium Market, platinum dropped to $1,779 an ounce from $1,793.

Palladium increased to $824 an ounce from $807.

BASE METALS: Base or industrial metals mainly rose as tight supplies helped to mitigate debt concerns.

Copper gained as the world's biggest copper mine in northern Chile suspended shipments because of a strike.

The management of the Escondida mine said notices had gone out to its customers informing them that the company would not be able to meet contracts for copper concentrate.

Chile is the world's largest copper producer, with 5.6 million tons annually. More than a million tons a year -- or 6.8 percent of the world production -- are produced at the Escondida mine.

"Copper prices have been firm, but it's surprising that they haven't been stronger in the face of a calamitous supply picture," said Barclays Capital analyst Gayle Berry.

By late Friday on the London Metal Exchange (LME), copper for delivery in three months climbed to $9,737 a tonne from $9,652 the previous week.

Three-month aluminium grew to $2,616 a tonne from $2,577.

Three-month lead dipped to $2,631 a tonne from $2,687.

Three-month tin decreased to $28,100 a tonne from $28,200.

Three-month zinc advanced to $2,490 a tonne from $2,474.

Three-month nickel expanded to $24,475 a tonne from $23,950.

OIL: Crude futures slid amid fears of weaker demand for oil in the United States, the world's biggest consumer of oil.

"A lot of markets are trapped until we can get past this debt ceiling and all the bickering of Congress, the Senate, and the White House," said Rich Ilczyszyn, an analyst at brokers Lind-Waldock.

"You don't want to buy oil until you can figure out what's happening in the US. The market is preoccupied. Everything is hypersensitive right now."

By Friday on London's Intercontinental Exchange, Brent North Sea crude for delivery in September fell to $115.91 a barrel from $118.53 a week earlier.

On the New York Mercantile Exchange, West Texas Intermediate (WTI) or light sweet crude for September dropped to $95.54 a barrel from $99.81.

COCOA: Prices extended losses on expectations of large supplies in top cocoa producer Ivory Coast.

"Market players are evidently coming to recognise that supplies are ample," said Commerzbank analyst Carsten Fritsch.

By Friday on LIFFE, London's futures exchange, cocoa for delivery in September dropped to £1,853 a tonne from £1,913 the previous week.

In New York on the NYBOT-ICE, cocoa for September fell to $2,971 a tonne from $3,076.

COFFEE: Coffee futures diverged, as Arabica coffee prices hit six-month lows of 237.20 cents a pound in New York.

"Coffee futures continued to be influenced by macro events (such as US debt worries), in the absence of fresh fundamental (supply and demand) news," said Kona Haque, an analyst at Macquarie financial group.

By Friday on NYBOT-ICE, Arabica for delivery in September fell to 240.10 US cents a pound from 241.40 cents the previous week.

On LIFFE, Robusta for September increased to $2,062 a tonne from $2,028.

SUGAR: Prices slid on weak economy concerns after a strong start to the week, when sugar hit five-month highs of 31.68 cents a pound in New York amid a tight supply environment in major producer Brazil.

By Friday on NYBOT-ICE, the price of unrefined sugar for delivery in October dropped to 29.50 US cents a pound from 31.34 cents the previous week.

On LIFFE, the price of a tonne of white sugar for October slipped to £771 compared with £812.70 for the August contract the previous week.

GRAINS AND SOYA: Prices were mixed.

By Friday on the Chicago Board of Trade, maize for delivery in September declined to $6.67 a bushel from $6.90 a week earlier.

November-dated soyabean meal -- used in animal feed -- slipped to $13.57 a bushel from $13.88.

Wheat for September retreated to $6.88 from $6.92.

RUBBER: Rubber prices rose on the back of speculative buying.

The Malaysian Rubber Board's benchmark SMR20 increased to 469.65 US cents a kilo from 465.00 US cents the previous week.

© 2011 AFP

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