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LONDON, Sept 20: Soaring gold prices steadied over the week as traders watched warily to see if a meeting of the International Monetary Fund (IMF produced a new deal to limit central bank sales of the metal.
Meanwhile, oil prices dipped on news of a significant rise for American energy stockpiles, with not even the destructive march of Hurricane Isabel across the US East Coast able to push them up again.
GOLD: Gold took a pause for breath after rising the week before to prices not seen since February, with most attention focused on the weekend’s upcoming IMF meeting in Dubai.
On Friday afternoon, prices stood at a fixing of $396.75, against $378.25 a week earlier.
We’ve gone back to (gold) prices tending to follow the currencies, said SG Securities analyst Stephen Briggs.
Traders were cautious ahead of the IMF gathering on speculation that a new global deal could be reached there on limiting gold sales by central banks, he said.
The Central Bank Gold Agreement, originally called the Washington Agreement, expires in September next year, and there have been calls for it to be renewed as soon as possible to avoid market volatility.
However Briggs predicted this was unlikely.
People have been focusing on the IMF meeting because some people think that a new Washington Agreement will be signed. But I don’t believe there will be one yet, he said.
Overall, the metal’s position was still strong, he added.
Gold still benefits from its safe-heaven value, or if you prefer, its status of “ambulance chaser”: in other words, bad news is good news for gold.
SILVER: Silver lost a small amount of ground after reaching its highest level for more than three years the week before, with fund selling eating into prices.
Silver stood at $5.200 per ounce on the London Bullion Market on Friday, against $5.315 the previous week.
The metal had seen an “up and down” week, said Briggs, but looked well set for the near future.
There is a reasonable chance that silver next year will outperform gold, because if the world economy is going to recover, it is not necessarily good news for gold but it is good news for silver, which is essentially used for industrial purposes, he said.
PLATINUM AND PALLADIUM: Platinum and palladium had a quiet time as action in the gold and silver markets hogged attention.
There was “not much to say” about either metal at the moment, Briggs said.
Platinum is steady at around $700, that is a strong price but it is a little bit off from the peaks, he said.
Palladium is quite strong but it is not really going anywhere.
The platinum price stood at $699 per ounce on the London Platinum and Palladium Market from 701 a week earlier.
The palladium price retreated to $213 an ounce against 214 the previous week.
BASE METALS: Base metal prices spent a volatile trading period being buffetted mainly by daily economic news, with the exception of nickel, which soared above $10,000 per ton to a three-year high.
Nickel prices only had another 500 or so dollars to go before they saw levels not experienced since the late 1980s, Briggs noted.
There is no new mine production expected to come on stream next year, and with stocks quite low and strong demand, it is almost certain that we are going to see a true deficit, he said.
Over next six to nine months, could go to US$11,000 (per ton).
By Friday, three-month copper prices stood slightly higher at $1,820 per ton on the London Metal Exchange against 1,818.5 a week earlier.
Three-month aluminium prices inched to $1,427 per ton from 1,424.
Three-month nickel prices rallied to $10,090 per ton from 9,890.
Three-month zinc prices rose marginally to $828.5 per ton from 827.
Three-month tin prices were unchanged at $4,920 per ton.
Three-month lead prices gained to $521 per ton from 519.
OIL: Oil prices resumed their downwards move, principally in the wake of a bigger-than-expected rise in US stockpiles of crude oil and gasoline.
Even Thursday’s arrival of Hurricane Isabel’s pounding seas, torrential rain and winds on the US East Coast failed to support prices, given the lack of a perceived risk to oil infrastructure.
By late Friday, the price of benchmark Brent North Sea crude oil for October delivery stood at $25.65 a barrel in London from $26.37 a week earlier.
In New York, the reference light sweet crude October contract dropped to 27.15 dollars per barrel from 28.25 dollars.
The bulk of the movement came on Wednesday after the US Department of Energy unveiled figures which showed a strong rise in crude stockpiles of 3.1 million barrels over the previous week. Inventories of gasoline, or petrol — low US stocks of which had kept oil prices well supported throughout the traditionally consumption-heavy summer rose 2.7 million barrels.
This was the dominant factor in trade, and Hurricane Isabel had remarkably little impact by comparison.
With relatively few oil refineries on the US East Coast, traders banked on industry infrastructure escaping largely unscathed.
It’s all very spread out, it will be bad luck if one (refinery) is hit, very bad luck if two are hit, said Prudential Bache broker Christopher Bellew.
News from Iraq also proved relatively unimportant for prices, even news of yet another blaze on an oil pipeline carrying supplies northwards for eventual export to Turkey.
The following week, the return of Iraq in the shape of its new oil minister Ibrahim Mohammad Bahr al-Uloom, was set to be the star attraction at a meeting of oil industry cartel OPEC in Vienna.
Despite the symbolic significance, the meeting was unlikely to see any change in quotas, analysts said.
Nobody is really talking about it to be honest, GNI trader Paul Goodhew.
RUBBER: Rubber futures continued their upward march as traders fretted about limited stocks in Japan and possible supply difficulties.
Stocks in the Japanese warehouses are still at a very low level historically, said Chris Caiger from brokers Symington.
We are hearing this week that there’s been some more disruption to production in producing countries such as Thailand, so the latex supply is not very good, he added.
In Kuala Lumpur, the RSS 1 index rose to 4.150 ringgit per kilo on Thursday from 4.010 ringgit the previous week.
COCOA: Cocoa futures dropped further over the week as rain in the Ivory Coast boosted hopes for the harvest in the world’s primary producer.
Fundamentally, the incidence of rains in the Ivory Coast cocoa growing areas has dispelled the dry weather and yield concerns that have been the support of this market, said Ann Prendergast of brokers Refco.
COFFEE: Coffee prices tumbled as a wave of investment fund sales pulled the rug out from under the market.
Coffee futures collapsed under pressure of heavy fund selling, said Refco’s Prendergast.
SUGAR: Sugar prices stabilised somewhat, with the bulk of activity connected to technical matters such as the imminent expiry of the October contract in New York.
On LIFFE, the price of a ton of white sugar for December delivery dipped slightly to $184.30 on Thursday from 187.90 a week earlier.
On the CSCE in New York, a pound of unrefined sugar for October delivery rested unchanged at 6.00 cents.
GRAINS AND SOYA: Grain prices fell while those for soya increased during a week dominated by technical deals in the absence of any other significant news.
On LIFFE, the price of a ton of wheat for November delivery edged down to 88.10 pounds from 88.15 pounds a week earlier.
In Chicago, wheat for December delivery fell back to 340.75 cents a bushel from 351.75.
Maize for December delivery weakened to 223.75 cents a bushel from 233.
Soyabeans for November delivery climbed to 627 cents a bushel from 615.75.
October-dated soyabean meal — used in animal feed — dipped to $187.70 per ton from 192.20.
COTTON: Cotton prices continued their recent climbs, albeit on a more modest scale, as traders attempted to predict whether the course of Hurricane Isabel could damage crops.
Prices climbed early in the week as it became clear the storm was heading for the United States, but fell back somewhat later, said Refco’s Prendergast.
The market has solid fundamental backing it but is in overbought territory leaving it susceptible to a pullback,” she added.
New York’s December contract climbed to 65.84 cents a pound on Thursday from 65.52 the previous week.
The Cotton Outlook Index of physical cotton, the average of the world’s lowest prices, gained to 65.25 cents from 61.65.
WOOL: Wool prices were pulled lower by a strengthening of the Australian dollar which made the commodity less appealing to overseas buyers, despite a good spread of purchasers.
The Australian currency has now firmed 4.4 per cent against the US dollar since the end of August, the Australian Wool Industries Secretariat noted in its weekly report.
Its impact is being seen in the market, it said. The British Wooltops index eased back to 550 pence from 552 pence. —AFP
