0
LONDON, Oct 19: Gold prices fell to a seven-week low this week as speculators piled out of the precious metal and into surging global stock markets.
The stunning recovery in world equity prices also triggered gains in most base metal prices.
Oil prices were little changed here this week despite a devastating bombing on the Indonesian island of Bali that reawakened terrorism fears.
Cocoa prices retreated briskly from recent 17-year high points after rebel forces in Ivory Coast, the world’s leading producer, signed a truce which signalled an end to a month-long bloody uprising.
GOLD: Gold prices sagged this week, hit by waning speculative interest following a stunning recovery in global stock indices.
The spot price of the yellow metal fell to $310 per ounce on Thursday its lowest level in more than seven weeks although prices subsequently recovered slightly.
UBS Warburg analyst John Reade said the gold market will continue to take its short term direction from the moves in the equity markets.
But I think we’re coming to the end of the sell-off. We may go down to the 305 (dollars per ounce) but there is not much more room on the downside, he added.
Reade, who believes US speculators have now liquidated the majority of their positions, said it was doubtful market players would sell the market at present levels, given the ongoing threat of terrorist attacks and a war in Iraq.
Gold prices were fixed at $312.75 per ounce on the London Bullion Market on Friday against $316.85 the previous week.
SILVER: Silver prices rose this week as the market, which last week fell to its lowest level since February, staged a technical recovery despite the negative influence of weaker gold prices.
Silver was fixed on the London Bullion Market at $4.34 an ounce on Friday afternoon against 4.2950 the previous week.
UBS Warburg’s Reade said with US speculators believed to be building positions in the metal, the recovery in silver prices could have further to run.
It has been sold very hard on speculative short selling and I expect that short selling to be reversed, he said, referring to investors who have been selling silver which they do not own and then borrowing it, in the hope of buying it back later at a lower price.
Silver is poised to move higher, but it will need gold to stop falling, the Reade said.
PLATINUM AND PALLADIUM: Platinum prices were stable this week as the market looked to consolidate on recent strong gains which helped push prices to their highest level in 18 months a week earlier.
By Friday, an ounce of platinum stood at $592 on the London Platinum and Palladium Market, unchanged from a week earlier.
This rally looks like it is coming to an end. We’ll see platinum trading lower, back to the 565/570 (dollar) level, said Reade.
BASE METALS: Most base metals prices pushed higher this week in step with a rebound on global stock markets.
It has been a follow-on effect from what’s been happening in the stock market, said BNP Paribas analyst Charles Kernot.
People have responded to that on the base metal markets by saying if the stock markets are now indicating that perhaps there is going to be an economic recovery, metal prices need to reflect the response to that improved outlook, he added.
But Kernot said that with economic growth and industrial production in the world’s major economies likely to remain relatively weak going into 2003, it was unclear whether demand would improve sharply in the short term.
Higher prices could also encourage mining companies to produce more which would offset gains, he added.
On the London Metal Exchange (LME), three-month copper prices rose to $1,516.5 per ton from $1,488 the week before.
Three-month aluminium prices gained to $11 per ton to $1,322.
Three-month nickel prices added $320 per ton to 6,780, zinc firmed $13 per ton to $777, while lead shed four dollars per ton to 431 and tin dipped $30 per ton to 4,360.
OIL: Oil prices were steady in London but edged higher in New York, though traders said the Bali bombing had a limited impact, as did weekly estimates of US oil stock levels.
There was a mixed response to signs that the UN Security Council was moving closer to a compromise on Iraq by the end of the week, though the development appeared to be weighing on prices, traders said.
By Friday afternoon, Brent crude for December delivery stood at $27.87 a barrel, against $27.83 a week earlier.
In New York, November-dated light sweet crude futures traded at $29.56 up from 29.14 a week earlier.
The Bali bomb had a negligible impact despite a warning from Indonesia’s top security minister that terrorists may target vital oil and gas installations.
RUBBER: Rubber prices ended the week slightly lower.
The market was drifting along, (with) prices easing lower, said Symington broker Chris Caiger.
Most people weren’t that keen on selling. Tyre makers bought some stocks, he added.
The immediate impact of the Bali bombing on the rubber market was limited, Caiger said, though traders will be monitoring the effects on the Indonesia economy and producers there.
In Kuala Lumpur, the RSS index fell to 3.125 ringgit per kilo from 3.195 ringgit the previous week.
COCOA: Cocoa prices fell back sharply this week after rebel forces in the Ivory Coast signed a truce which signalled an end to a month-long bloody uprising that has sent cocoa prices soaring to 17-year highs.
COFFEE: Coffee prices leapt for the second week running as the market fretted about the potential implications for world supply of an unusually dry period of weather in some of the major Brazilian growing regions.
SUGAR: Sugar prices fell in London on profit taking but continued to rise in New York, underpinned by further purchases by investment funds, and a surprise order from Morocco.—AFP
