January 5, 2003	Sunday	Ziqa’ad 1, 1423

LONDON, Jan 4: Most commodities markets had a quiet start to 2003 in holiday trading this week, though oil prices had a bumpy ride as worries about the impact of a month-old strike in Venezuela kept traders nervous.

Better-than-expected data published by the US Institute for Supply Management (ISM) indicating a rebound in the US manufacturing sector in December gave a fillip to prices of base metals, sliver and the platinum group metals.

But the data also sparked a dollar rally which hit gold prices.

GOLD: Gold prices zig-zagged lower in thin holiday trading, undermined by a jump in the value of the dollar in response to stronger-than-expected US manufacturing data, analysts said.

Gold prices were fixed at 344.5 dollars per ounce on the London Bullion Market on Friday afternoon against 348.30 dollars the previous week.

Stronger than expected US figures, in the form of the Institute of Supply Management, were released triggering a rally in the dollar and the Dow (Jones industrials US share index) as gold came under pressure, said James Moore, analyst at TheBullionDesk.com website.

But many traders were away from their desks still because of Christmas and New Year holidays.

Monday should see things back into full swing as traders wait for further US data to see if this is the start of the economic recovery, said Moore.

SILVER: Silver prices took heart from signs of improvement in the US manufacturing sector which should benefit the metal’s industrial uses, analysts said.

Strong US data (Thursday) gave the industrial base a boost as large volumes of trade selling was absorbed by the funds, said Moore.

Silver was fixed on the London Bullion Market at $4.785 an ounce on Friday afternoon against 4.67 the previous week.

PLATINUM AND PALLADIUM: The platinum group metals prices started the year in slightly better form thanks to the US manufacturing data, but trading volumes were low, analysts said.

By Friday, an ounce of platinum firmed to $603 on the London Platinum and Palladium Market from 592.75 dollars the previous week.

Strong US data (Thursday) gave the industrial demand a boost, said Moore.

Platinum should continue to find resistance from 600-10 dollars, although a break above could see the industrial metal make a test of $625, he added.

Palladium held steady at 236 dollars per ounce.

BASE METALS: Most base metals prices staged a new year mini-rally in response to the better-than-expected US manufacturing data.

The figures raised hopes that the world’s largest economy is on the mend, painting a brighter outlook for demand for base metals, though prospects remain uncertain, analysts said.

While it would be wrong to formulate a trading strategy based on a single figure, there is no doubt that the ISM manufacturing sector survey is the most important economic release of the month for the base metals, said Lawrence Eagles, analyst at brokers GNI.

OIL: Oil prices endured a volatile run, sliding early in the week in response to reassuring comments from the Opec oil cartel and then rallying towards the weekend after figures showed a big fall in US stock levels.

On Friday, the price of benchmark Brent North Sea crude oil for February delivery stood at $30.22 a barrel, against $30.07 a week earlier.

In New York, February-dated light sweet crude futures traded at $32.57 up from $32.35 a week earlier.

Oil prices took a dive on Monday after the Organization of Petroleum Exporting Countries (Opec) indicated it could pump more oil later this month if prices remain high.

The Organization of Petroleum Exporting Countries (Opec) could hike production by at least 500,000 barrels a day if prices remain above $29 a barrel after January 15, an Opec source said.

If the oil prices continue between $29 and 30 then we might have a good case in support of an increase in production, the anonymous source said from the cartel’s Vienna headquarters.

But prices resumed their upswing in the new year on worries about the impact on US oil stock levels of a strike in Venezuela, possible war in Iraq and cold weather in United States.

Weekly estimates of US oil stock levels showed a big fall in US oil stock levels and lower imports as the impact of a month-old strike in Venezuela took its toll.

Analysts also expressed scepticism about a claim by Venezuelan President Hugo Chavez on Thursday that the government would soon get the oil industry back to normal.

Peter Gignoux, head of petroleum desk at Schroder Salomon Smith Barney, said of Chavez’s claim: I think the technical term to describe it is baloney.

RUBBER: Rubber prices pushed higher because of forecasts of wet weather and weak production in Thailand, analysts said.

Since before Christmas, it went up quite a lot, but most of the action was last week when Japan was open, whereas this week it tended to be rather quiet, said Symington analyst Martin Hampson.

COFFEE: Coffee prices ticked higher thanks to buying by investment funds, though activity was muted.

The market went up (Thursday) because of fund buying coming in, said Caroline Eagles, a coffee watcher at the CommodityExpert.com website.

People expect the Vietnamese producers to come into the market next week as their crop is coming out, which will put pressure on the market, she added.

SUGAR: Sugar prices nudged higher in thin trading.

The week of Christmas was very, very quiet, and the prices just held in their range, said Czarnikow analyst John Kovaks.

He said fund-buying had pushed the market higher on the last day of 2002 and prices had since extended gains in quiet trading.

GRAINS: Grain prices ended lower in thin holiday trading, pressure by investment fund selling and forecasts of favourable weather in producer regions in South America, traders said.

In Chicago a bushel of wheat for March delivery declined to 328.75 cents from 333 cents a week earlier.

A bushel of maize in Chicago for March delivery fell to 237 cents from 239.75 the previous week.

On LIFFE, the price of a tonne of wheat for January delivery fell to 58.75 pounds from 57.50 a week earlier.

COTTON: Cotton prices gained ground as a firmer tone seen before Christmas continued, though trading was muted.

The last time we had export sales (two weeks ago) they were quite bullish and that’s when we got a movement going upwards, said Philipe Pesque, analyst at brokers Refco.

Funds were quite active towards the end of the year after squaring up some of their positions.

It was a trade that really helped the market and pushed it higher and as soon as it pushed it higher the speculators joined in, he added.

In New York, the March contract rose to 52.01 cents a pound on Thursday from 51.80 the previous week.

The Cotton Outlook Index of physical cotton, the average of the world’s lowest prices, was unchanged at 56.50 cents.

WOOL: Australian wool auctions were suspended for the Christmas break, with sales expected to resume on January 6. The Australian Eastern index stood at 11.65 Australian dollars per kilo before the break in the auctions.

The British Wooltops index stood at 570 pence. —AFP