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On September 6, gold moved to fresh six-week high in the European trading, driven higher by the prospects of all-out US-led military action against Iraq and jitters on the first anniversary of the September 11 attack. Spot gold was quoted at $319.20 an ounce in the New York market.
Strikes by the US and British warplanes against an air defence facility in southern Iraq also fed into buying for gold, traders said. Gold’s latest gains put the metal 17 per cent higher than at this time last year, making it one of the strongest performing financial assets. “So long as prices remain supported at $318, New Yorkers could well attempt to break psychological resistance 20 with $325 objective looming ahead,” said standard Bank London in a market report.
Gold shot up nearly 10 per cent immediately after the September 11 attacks to $295 as investors sought a bolt hole amid the financial chaos set off by the airplane suicide attacks.
Bullion gained more than $40 to reach over $400 when Iraq invaded Kuwait in 1990, surging with oil prices.
Fears of a repeat attack on the US mainland were a major factor in gold’s eventual move to a 2-1/2 year high of $330.30 in June 2002.
Meanwhile, imports of gold into India, the world’s largest gold consumer, have fallen sharply during its ongoing festival season as world prices jump. Imports have fallen to about 3,000 gold bars a day from 8,000-10,000 bars a week ago as world prices jumped to about $322 per ounce on September 9, from some $312 last week. India imports 15,000 to 17,000 gold bars a day on average and up to 20,000 bars during the peak festival season. One gold bar weighs 116.64 grams.
Traders said they were comfortable with buying gold at about $310 per ounce but if prices were to settle above $320 an ounce, they would only buy for immediate needs.
India imported 84.7 tonnes of gold in January-March, down from 127.5 tonnes in the same period a year earlier as demand fell to 149.8 tonnes in the first quarter of 2001 from 249.7 tonnes a year ago on volatile prices and higher opening stocks.
In the first week of September oil prices rallied to their highest level in almost a year in London as concerns grew over the possibility of a US-led attack on Iraq. By September 6, Brent crude for October delivery had risen to $28.66 a barrel, up from $27.63 a week earlier.
The last time prices were so high was in the aftermath of the September 11 terrorist attacks in the US.
In New York, October-dated light sweet crude futures gained to $29.72 from $28.90 a week earlier.
Traders said that the latest jump on September 6 had been fuelled by news of an air raid by the US and British warplanes against and Iraqi air defence base, which some reports said had involved 100 aircraft.
Analysts said that on top of concerns that a US invasion of Iraq might destabilise the Middle East oil-producing region, prices were also underpinned by figures showing large falls in the US crude oil stock levels.
Crude oil stocks fell by 4.6 million barrels, or 1.5 per cent, to 298.5 million in the week ended August 30 from the previous week, the US energy department reported. Gasoline inventories dropped by 1.5 million barrels to 205.3 million, while distillate fuel stocks declined by 2.0 million to 129.6 million. Aluminium: Some of the newly industrializing countries in Asia are drawing up plans for aluminium making facilities, capable of producing much more of the metal than domestic need requires in the hope of earning more revenue from exports.
However, large tonnes flooding into regional markets threaten to undermine the recovery in world aluminium market, already hit by a severe supply glut, analysts say.
Aluminium prices are down more than $200 a tonne from a year ago to around $1,300 a tonne, while stocks held by the London Metal Exchange futures market are the highest in seven-and-a-half years.
Many of Asia’s new smelters are years away from development though this has done little to deter planning in countries including Vietnam, Malaysia and foremost China.
