November 16, 2003	Sunday	Ramazan 20, 1424

LONDON, Nov 15: Gold was the talking point of the commodities week, with the metal almost breaching the psychologically important $400 per ounce mark for the first time in more than seven years.

The gains came about because of the fall of the US dollar, a phenomenon which also proved the major factor in other markets ranging from platinum to wool.

Meanwhile oil prices crept up as traders reacted nervously to suicide bombings in Iraq and Saudi Arabia.

GOLD: Gold came within a whisker of reaching $400 per ounce, a level last seen in March 1996.

By Friday afternoon, prices stood at a fixing of $396.70 an ounce on the London Bullion Market, against $378.95 a week earlier. The main driver was the relative decline in the dollar, the currency in which gold is denominated, said Barclays Capital analyst Matthew Schwab.

The continuing and ongoing difficulties that the US is having in Iraq tends to be supportive of the euro and thus the gold price, he said, referring to incidents such as a suicide bomb in southern Iraq on Wednesday which killed 18 Italian troops and nine Iraqis.

The weakness of the dollar makes gold less expensive and thereby stimulates demand. In addition, gold is still the third largest reserve asset in the world. Supply and demand issues don’t matter on a daily basis, because of those enormous stocks. It is often seen as a currency more than a commodity.

Four hundred dollars might have been beaten earlier this week but for a brief rally in the dollar, said James Moore from specialist website TheBullionDesk.com.

Gold looked set to break the psychological $400 level Wednesday and I think would have made it had the dollar remained under pressure, he said.

SILVER: Silver prices rebounded over the week as it got pulled up in gold’s slipstream, although analysts expressed doubt as to how much further the metal could climb.

The silver price stood at $5.300 per ounce on the London Bullion Market on Friday against $4.695 the previous week.

Although silver could rally from renewed speculative buying, we remain unimpressed with the metal’s supply and demand fundamentals, said UBS analyst John Reade.

Silver can rally further but we doubt that much more than $5.40 to $5.50 is on the cards.

PLATINUM AND PALLADIUM: Platinum prices reached further 23-year highs over the week, with palladium also mainly holding up, due mainly again to the dollar’s decline.

Platinum has been boosted over recent weeks due to hopes of a surge in demand from the manufacturers of fuel cells, an alternative source of clean power which use the metal.

Prices were being pushed further by the currency effect, said TheBullionDesk.com’s Moore.

Favourable moves by the dollar continue to keep the metal well supported, particularly from India as fashion trends give jewellery demand a boost while the greenback’s recent weakness has had a less favourable impact on the South African mining community with many producers reluctant to sell, he said.

Further gains look increasingly likely with $800 being my upside target, with the metal’s strong fundamentals boosting speculative buying.

By Friday, the platinum price stood at $769 per ounce on the London Platinum and Palladium Market against 756 a week earlier.

The palladium price traded at $198 an ounce from 204.

BASE METALS: Base metal prices climbed to a series of several-year highs, led by speculative buying in the hope that demand will soon pick up with the global economy.

Nickel reached a 14-year best, copper rose to levels not seen in six years, and aluminium hit its highest level since May 2001.

The appetite is huge, said Societe Generale analyst Stephen Briggs.

Whenever the prices do weaken, the hedge funds take it as an opportunity to buy again and push prices back up.

By Friday, three-month copper prices had risen to $2,094 per ton on the London Metal Exchange from 2,078 a week earlier.

Three-month aluminium prices gained to $1,532 per ton from 1,507.

Three-month nickel prices advanced to $12,410 per ton from 12,200.

Three-month zinc prices increased to $942 per ton from 929.

Three-month tin prices strengthened to $5,345 per ton from 5,200.

Three-month lead prices climbed to $632 per ton from 614.

OIL: Oil prices were pushed upwards over the week, with the main driver being market anxiety at deteriorating security in Iraq and violence elsewhere in the Middle East, as well as some slightly puzzling data for US stocks. By late Friday, the price of benchmark Brent North Sea crude oil for January delivery stood at $29.45 a barrel in London from $28.63 a week earlier.

In New York, the reference light sweet crude December contract rose to $32.10 per barrel from $30.60.

Prices initially rallied at the very start of the week as traders took fright at a suicide bombing the previous weekend which killed 17 people in Saudi Arabia, the globe’s biggest crude producer.

Market players were worried that future attacks could target the crude-rich country’s ravaged oil industry, which is in the process of being painstakingly reconstructed.

After the suicide bombing that took place this week, you never know whether they are going to try to take down an oil installation there, said GNI trader Kevin Blemkin.

Additionally, prices were supported as weekly data for US energy stocks — released a day late because of the Veterans Day holiday — brought some mixed results.

The independent American Petroleum Institute (API) gave a significantly bigger fall in crude oil stocks than the US Department of Energy, also giving a a bigger increase in gasoline.

Meanwhile the DoE said stocks of distillate fuels, used for heating oil, fell and the API recorded a big increase of 1.54 million.

The market is having to take a view on these very conflicting reports, noted Commerzbank analyst David Thomas.

RUBBER: Rubber futures fell for the first time since August as buyers finally began retreating from the market.

Trade was currently “erratic and uncertain”, said Martin Hampson from brokers Symington.

The market has overbought and got far too high, it’s unsustainable, that was why we got a sharp correction over last weekend and the beginning of the week, he said.

But when prices have dropped, there has been buying interest from consumers.

In Kuala Lumpur, the RSS 1 index slid to 5.120 ringgit per kilo on Thursday from 5.440 ringgit the previous week.

COCOA: Cocoa prices shot up for a second week on fears about further unrest in violence-wracked leading global producer Ivory Coast.

Concern grew after rebels who hold large areas of the Ivory Coast called a mini-summit of west African leaders a “failure,” saying President Laurent Gbagbo must be forced out.

Prices were supported by mounting Ivory Coast tensions as talk of secession circulates, stirring political unrest, said Refco analyst Ann Prendergast.

On LIFFE, London’s financial futures exchange, the price of cocoa for March delivery gained to 954 pounds a tonne on Thursday from 904 the previous week.

On the CSCE, the New York futures market, the March contract rose to $1,554 per ton from 1,423.

COFFEE: Coffee prices stayed relatively stable around last week’s 18-month lows, with a report that Brazil’s harvest might be smaller than expected failing to spark much action.

The steadying prices will be reassuring to some, though sceptics will be braced for further losses, noted Refco’s Prendergast.

On LIFFE, Robusta quality for January delivery inched down to $683 per ton on Thursday from $686 the previous week.

On New York’s CSCE market, Arabica for December delivery gained to 60.15 cents a pound from 59.70.

SUGAR: Sugar futures rebounded on news of a lower-than-expected global sugar surplus this year, despite expectations of a bumper harvest in Brazil.

The world production surplus for 2003/04 is now estimated by the International Sugar Organization at 1.37 million tons, against a figure of 1.5 million given in September.

On LIFFE, the price of a ton of white sugar for March delivery rose to $187.50 on Thursday from 180.50 a week earlier.

On the CSCE in New York, a pound of unrefined sugar for March delivery increased to 6.34 cents from 6.02 cents.

GRAINS AND SOYA: Grain prices gained well on the back of speculative purchasing and interest from Chinese buyers, with rumours of fresh interest from China especially helping soya futures.

On LIFFE, the price of a ton of wheat for November delivery rose to 109.25 pounds from 99.90 a week earlier.

In Chicago, wheat for December delivery gained to 405.75 cents a bushel from 375.50.

Maize for December delivery increased to 240.75 cents a bushel from 234.25.

Soyabeans for November delivery strengthened to 771 cents a bushel from 757.75. December-dated soyabean meal — used in animal feed — edged up to $244.70 per ton from 244.20.

COTTON: Cotton prices slid slightly in soporific trade held up by a one-day delay in the release weekly US cotton export data due to the Veterans Day holiday.

Traders had to wait for Friday for the figures, noted Refco’s Prendergast, adding that some traders feared the market stagnation heralded an imminent price fall.

New York’s March contract edged down to 77.96 cents a pound on Thursday from 78.49 the previous week. The Cotton Outlook Index of physical cotton, the average of the world’s lowest prices, slipped to 77.95 cents from 78.15.

WOOL: Wool prices fell to fresh two-year lows as the Australian dollar continued to appreciate against its US equivalent, making wool prices less affordable for international buyers.

The Australian wool market lost further ground this week with prices falling by 2.8 per cent on average at sales in Sydney, Melbourne and Fremantle, the Australian Wool Industries Secretariat said in its weekly market update.

The main reason had been the Australian dollar’s rise, which is not good for the wool industry, it said.

The Australian Eastern index was pegged down to 7.79 Australian dollars per kilo from $7.99 the previous week.

The British Wooltops index was unchanged at 490 pence.—AFP