AFP: Commodities review: Gold shoots to record high
The price of gold soared to a record high above 1,060 dollars an ounce this week, spurred on by a weakening dollar and doubts about the greenback’s future as the world’s leading reserve currency.
PRECIOUS METALS: The price of gold struck a series of all-time highs this week, beginning on Tuesday, as the dollar slid on a reported plan by Gulf states to stop using the greenback for oil trading.
Gold hit $1,061.52 an ounce on Thursday, beating the all-time peak of $1,032.70 struck in March, 2008. “Gold prices hit an all-time high as the dollar weakened,” said Barclays Capital precious metals analyst Suki Cooper. “The dollar weakness appears to be related to ... (reported) secret talks about oil being priced in a basket of currencies including gold rather than the dollar, which has added to concerns about the future role of the dollar in international financial markets,” she added.
The dollar’s future as the world’s top currency was thrown into doubt on Tuesday as a report said Arab states had launched secret moves with China and Russia to stop using the greenback for oil trading.
Arab states have launched moves with China, Russia, Japan and France to stop using the dollar for oil trades, British daily The Independent reported on Tuesday, but the story was denied by a number of nations. The United Nations meanwhile on Tuesday called for a new global reserve currency to end dollar supremacy, which has allowed the United States the “privilege” of building a huge trade deficit.
Gold, viewed as a safe-haven investment, has won back favour in recent months as the global economy struggles out of its worst slump in decades.
The run-up in gold has been largely driven by weakness in the dollar which makes dollar-priced commodities cheaper for holders of stronger currencies, boosting demand. Gold traditionally wins support from fears about higher inflation because the metal is widely regarded by investors as a safe store of value.
Precious metals consultancy GFMS last month warned that the current upwards trend in gold may not be sustainable should global stimulus packages fail to boost flagging demand in the battered world economy and inflation fall as a result.
The Group of 20 leaders of emerging and developed nations recently agreed at a summit in Pittsburgh not to roll back massive stimulus measures that helped contain a severe global recession.
Gold’s run higher this week meanwhile offered support to other precious metals, with silver hitting a 14-month peak of $17.92 an ounce. Palladium reached the highest point since August, 2008. By late Friday on the London Bullion Market, gold surged to $1,051.50 an ounce from $1,003.50 a week earlier.
Silver jumped to $17.63 an ounce from $16.21. On the London Platinum and Palladium Market, platinum climbed to $1,337 an ounce at the late fixing on Friday from $1,269. Palladium advanced to $323 an ounce from $292.
OIL: World oil prices rallied as the dollar weakened on the report that Gulf states considered dropping the greenback for oil transactions. Prices meanwhile closed up more than two dollars a barrel on Thursday as investors sought refuge in commodities amid a weakening dollar and as economic recovery won a lift in the United States, traders said. Alcoa surprisingly swung into profit in the three months to September 30 after three quarters running of losses, the US aluminium giant announced Wednesday. The company said its net income was $77m or eight cents a share in the quarter ended September, compared with a net loss for the second quarter of $454m or 47 cents per share.
Oil market traders also digested news from the main armed group in southern Nigeria which on Wednesday said it would resume attacks on the oil industry when its ceasefire expires on October 15.
The Movement for the Emancipation of the Niger Delta (MEND) dismissed a government amnesty programme as a “charade” and warned it would no longer limit its attacks on pipelines.
Limiting gains on Friday was a report from the International Energy Agency that warned demand for crude was “in the doldrums” and that forecast prices would next year fail to rise much higher compared with current levels. Oil demand is firming but the global market is still weak, trapped in a bull-bear conflict over how a groggy recovery from the global crisis will affect energy consumption next year, the International Energy Agency said. On London’s InterContinental Exchange (ICE), Brent North Sea crude for November advanced to $70.14 a barrel from $67.93 a week earlier.
BASE METALS: Base metals prices rallied, boosted by a falling dollar. Aluminium won additional support on Alcoa’s results, while tin was in focus after a single investor bought up more than 90 percent of the metal traded in London.
A senior industry source said that British hedge fund Ebullio Capital Management had bought more than 90 percent of tin traded on the London Metal Exchange, echoing press reports. A spokesman for Ebullio declined to comment on the matter, which has failed to boost tin prices significantly this week. By Friday on the London Metal Exchange, copper for delivery in three months jumped to $6,260 a tonne from $5,853 a week earlier. Three-month aluminium gained to $1,895 a tonne from $1,812. Three-month lead increased to $2,260 a tonne from $2,100. Three-month tin advanced to $14,700 a tonne from $14,175. Three-month zinc rose to $2,066 a tonne from $1,871. Three-month nickel climbed to $19,053 a tonne from $17,125.
COCOA: Cocoa prices hit the highest level for 24 years for a second week running by reaching 2,185 pounds a tonne on expectations of lower output in leading producer Ivory Coast. By Friday on LIFFE, London’s futures exchange, the price of cocoa for delivery in December jumped to £2,150 a tonne from £1,998 a week earlier. On the New York Board of Trade (NYBOT), the December cocoa contract climbed to $3,248 a tonne from $2,993.
SUGAR: Sugar futures fell, one week after striking 28-year highs of £640.50 a tonne on tight supplies. By Friday on LIFFE, the price of a tonne of white sugar for delivery in December fell to £573 from £614 pounds a week earlier.
GRAINS AND SOYA: Maize, wheat and soya prices all rose. By Friday on the Chicago Board of Trade, maize for delivery in December climbed to $3.69 a bushel from $3.33 a week earlier.
