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LONDON, Aug 10: Gold prices rode up above $310 an ounce this week on talk of buying by an Australian producer and speculation that policymakers at the US Federal Reserve might cut interest rates next week.
Base metals prices slid to multi-month lows towards the beginning of the week as the recent volley of grim economic news kept expectations of a rebound in demand for building blocks of economic growth in check.
But the complex managed to claw back lost ground as US equity markets continued their zig-zag recovery.
Oil prices also rebounded gently as a war of words between the United States and Iraq raised concerns that a US-led military strike on Baghdad might destabilise the Middle East and disrupt Gulf oil supplies.
Comments from the OPEC producer group seen as playing down the chances of an oil output hike in September also buttressed prices.
GOLD: Gold prices ran up above $310 an ounce amid speculation of buying by an Australian producer and talk of a possible US interest rate cut next week.
By Friday afternoon, gold was fixed at $312.95 an ounce on the London Bullion Market against $305.05 the previous week.
The key influence was unsubstantiated but strongly suspected producer hedge buy-back activity out of Australia, said SG Securities analyst Stephen Briggs.
Signs that producers are reducing their forward selling of gold has been one of the main drivers in the recent gold price revival after the market spent two years stuck in a narrow range around $270 an ounce.
Briggs said that because the rest of the fundamentals for gold were not very good then prices tended to slip if there was an absence of news about a shift by producers away from forward selling.
But he noted that prices had struggled to sustain their upward momentum.
The other thing is that in the last two weeks what was a clear-cut downward trend in the dollar has at the very least stalled, Briggs told AFP.
Dollar weakness tends to push the prices of dollar-denominated commodities up.
Rhona O’Connell, a gold watcher at the World Gold Council producer group, said that prices had also gained from safe-haven flows largely triggered by speculation that US policymakers might cut interest rates when they meet on Tuesday.
But she added: Conditions are thin, and physical purchasers have again moved to the sidelines, leaving the market watching the equities and dollar for direction.
SILVER: Silver prices rose on the heels of gold, but weakness in the base metals market capped gains.
Silver was fixed on the London Bullion Market at $4.63 an ounce on Friday afternoon, against 4.54 the previous week.
Briggs said that the direction in silver prices was largely dictated by gold but the size of the move was subject to the same factors that influenced the base metals because silver is primarily an industrial metal.
PALLADIUM and PLATINIUM: Platinum and palladium prices held steady again with little action in the market, analysts said.
But direction could come from the half-year results from South Africa’s Anglo-Platinum, the world’s leading producer, on Tuesday.
Analysts say there has been speculation that production will undershoot expectations which could boost prices.
On the London Platinum and Palladium Market (LPPM), an ounce of platinum stood at $543 an ounce on Friday against $525 a week earlier.
Palladium prices rose to $322 per ounce from $318.
BASE METALS: Base metal prices sank to multi-month lows toward the start of the week as the fallout from recent weak economic data kept prices depressed, but a recovery in US equities gave the market a much-needed boost.
Stephen Briggs, analyst at SG Securities, said that copper had plumbed a seven-month nadir in the early part of the week, while aluminium had sunk to levels not seen for nine months and zinc had probed an eight-month low.
The one that has most slavishly been following the stock markets up and down has been copper and the others really have largely followed, said Briggs.
Copper’s deemed the bellwether metal and there hasn’t really been much independent action from the others, he told AFP.
OIL: Oil prices rose for the first week in four on the prospect of a possible US-led attack on Iraq, a rebound in global stock markets and comments from Opec seen as playing down the chances of an oil output hike next month.
Brent crude for September delivery had risen to $25.08 from $24.67 a week earlier.
In New York, September-dated light sweet crude futures rose to $26.66 from 26.15 a week earlier.
Oil prices fell at the beginning of the week after Algeria became the latest member of the Organization of Petroleum Exporting Countries (Opec) to push for an increase in its output quota.
But prices recovered on the back of comments from Opec Secretary General Alvaro Silva Calderon that dampened expectations that the oil producer group would raise output when its ministers meets in Osaka, Japan on September 18.
We cannot make a firm prediction of the market situation, especially at this time, he said, quoted by the cartel’s OPECNA news agency.
Concerning the request by Opec member Algeria for an increase in its production quota, as well as similar indications shown by Nigeria, Silva said that all member countries had the right to present proposals about quotas and Opec had to study them.
Discussions and decisions on this matter will be agreed, taking into consideration all the circumstances as they affect all member countries of our organization. No one country will do it alone, he said.
Analysts said that prices were also drawing strength from speculation about a US-led attack on Iraq, which dealers worry would destabilise the Middle East oil producing region. But signs that US President George W. Bush might be softening his stance toward Baghdad removed some of the support for prices.
RUBBER: Rubber prices rose sharply at the beginning of the week in anticipation that the world’s top three rubber producers would sign an alliance aimed at improving the welfare of rubber farmers through higher prices.
According to Symington analyst Chris Caiger, the market rose strongly ahead of the announcement but failed to maintain its momentum after details of the agreement caused disappointment.
In Kuala Lumpur, the RSS index rose to 3.105 ringgit per kilo from 3.000 ringgit the previous week.
SUGAR: Sugar prices bounced back on news of the IMF loan to Brazil and a rebound in the value of the real, which should encourage Brazilian producers to lift exports again, traders said.
The fall of last week had to do with the continuing depreciation of the Brazilian real, said John Kovaks, a broker at Czarnikow.
Traders said that prices had also benefitted from rises in the prices of coffee and cocoa.
On LIFFE, a ton of white sugar for October delivery climbed to $181.5 on Thursday from $177.8 a week earlier.
On the CSCE in New York, a pound of unrefined sugar for October delivery rode up to 5.98 cents from 5.81.
SOYA: US soya prices sagged in response to forecasts of rain in producer regions, which eased concerns about the risks posed to crops of recent dry weather.
Prices have risen by 24 per cent this year because of parched conditions and analysts predict that production should fall to its lowest level in three years in 2002.
The forecast of rains offset the positive impact of an appreciation of the Brazilian real, whose weakness has been a negative factor for prices recently.
On the Chicago Board of Trade (CBoT), a bushel of soya for August delivery fell to $5.57 on Thursday from 5.86 a week earlier.
Soyabean meal used in animal feed for August delivery dropped to $180.5 from 189.3 the previous week.—AFP
