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LONDON, Oct 18: Base metals prices made further progress this week as signs that the US economic locomotive is picking up steam boosted expectations of a pick-up in demand.
But gold lost some of its shine as prospects of a recovery in the US economy lent support to the flagging dollar.
GOLD: Gold suffered fresh losses this week as sentiment towards the US dollar improved in response to a string of mostly better than expected US data.
By Friday afternoon, prices stood at a fixing of $370.50 an ounce on the London Bullion Market, against $372.30 a week earlier.
Dollar optimism continues to keep gold under pressure, said James Moore at the TheBullionDesk.com specialist website.
Gold still looks comfortable trading within the 368-80 dollar range for the moment.
One factor helping to limit gold’s losses was an announcement by the Dutch central bank that it would not reach the limit on bullion sales it has agreed to under an deal with other world central banks.
We estimate that the Dutch still have around 130 tonnes of gold to sell, said Barclays Capital analysts.
Central bank policymakers have indicated that they aim to renew the gold pact, which expires in September next year, and currently limits gold sales to 400 tons/year to those central banks that are a part of it.
SILVER: Silver prices eased back in line with gold, before recovering.
Silver stood at $4.920 per ounce on the London Bullion Market on Friday against $4.855 the previous week.
Silver initially dipped on the release of the US data as traders sold on the back of gold’s move. But after finding support at $4.85 the industrial metal has recovered as traders look at the longer term implications of a stronger US economy, said Moore at TheBullionDesk.com.
PLATINUM AND PALLADIUM: Platinum prices held close to 23-year highs seen the previous week, while palladium struggled to stand its ground.
Platinum prices have peaked at around $730 per ounce in recent days, levels previously not witnessed since 1980.
The move comes amid prospects of rising demand for use in fuel cells, seen as a promising future source of revenue.
In the last five to six years, demand for the metal has been continuously increasing and the supply hasn’t kept up with that,”said Jeremy Coombes at brokerage firm Johnson Matthey.
Fuel cells vehicles, which use platinum and no palladium, could be a factor in 10 years’ time when thousands of these vehicles will be sold every year, as there is a big commitment from auto manufacturers to develop them.
But platinum’s sister metal was back under pressure.
Moore said: Palladium has finally broken lower as stagnant demand and the prospect of rapidly rising mining supplies weighed on the metal.
By Friday, the platinum price stood at $727 per ounce on the London Platinum and Palladium Market against 732 a week earlier.
The palladium price fell to $194 an ounce from 207.
BASE METALS: Base metal prices marched ahead again, with nickel in the vanguard, on signs that the US economic revival is gathering pace, promising a boost to demand for raw materials.
Sentiment has really been growing (more positive) for quite a while, said Andrew Cole at Metal Bulletin Research (MBR), a specialist publication.
There is still a lot of confidence about the US recovery and the global economy. It was an important week for US data, with the industrial production rising by 0.4 per cent in September being very supportive.
Nickel, which has seen its value leap by 70 per cent over the past year, rose to a 14-year high of $11,680 on Tuesday. Copper prices are around the highest levels for three years, Aluminium and tin for over two years and lead for four years.
By Friday, three-month copper prices stood at $1,952 per ton on the London Metal Exchange against 1,879 a week earlier.
Three-month aluminium prices rose to $1,509 per ton from 1,486.
Three-month nickel prices traded at $10,790 per ton from 10,810.
Three-month zinc prices firmed to $916 per ton from 904.
Three-month tin prices were boosted to $5,300 per ton from 5,220.
Three-month lead prices strengthened to $580 per ton from 564.
OIL: Oil prices ended the week lower, giving back some of their recent gains as traders opted to take profits.
A mixed set of weekly US inventory figures also helped to assuage concerns about the low level of heating oil stocks going into the northern hemisphere winter.
By late Friday, the price of benchmark Brent North Sea crude oil for December delivery stood at $28.80 a barrel in London from $30.20 a week earlier.
In New York, the reference light sweet crude November contract eased to $30.55 per barrel from $31.13.
The US Department of Energy said crude oil stocks jumped 3.8 million barrels in the week to October 10 to 290 million barrels. But stocks fell for gasoline and distillates, which include heating oil.
The rise in stocks eases US winter stock worries that have combined with an Opec production cut to lift prices by about 18 per cent since the close of October 23, said analysts at brokerage firm Sucden.
The Organization of Petroleum Exporting Countries agreed last month to trim output by 3.5 per cent from the start of next month.
RUBBER: Rubber futures soared to their highest levels in nearly a decade on continued concerns about crops, given heavy rains in major growing nations Malaysia, Indonesia and Thailand.
Prices seem to be going higher and will stay like this for the foreseeable future, said Martin Hampson, an analyst at brokerage firm Symington.
There won’t be any significant retracement for the next two to three weeks.
In Kuala Lumpur, the RSS 1 index gained to 4.720 ringgit per kilo on Thursday from 4.510 ringgit the previous week.
COCOA: Cocoa prices were pushed down to the lowest levels in almost two years by a sluggish market hesitant to promote much movement in either direction.
The market is currently mired in uncertainty, said Refco analyst Ann Prendergast.
COFFEE: Coffee prices took another tumble, reaching near-three month lows following crop-enhancing rainfall in leading world producer Brazil.
The market had been “lulled” by Brazil’s showers of the week, said Refco’s Prendergast.
But now, traders were looking for other news, she said, calling the weather “a passe event”.
On LIFFE, Robusta quality for November delivery slipped to $692 per ton on Thursday from $702 the previous week.
On New York’s CSCE market, Arabica for December delivery declined to 61.40 cents a pound from 62.20 cents the previous week.
SUGAR: Sugar prices shuffled down to their lowest level in more than a year in London, and to a six-month trough in New York on poor fundamentals and technical-based selling.
With a bumper harvest in Brazil coupled with record production in China and Thailand, price conditions were “extremely negative”, said Refco’s Prendergast.
On LIFFE, the price of a tonne of white sugar for December delivery retreated slightly to 176.80 dollars on Thursday from 178.00 a week earlier.
On the CSCE in New York, a pound of unrefined sugar for March delivery eased to 5.97 cents from 6.01 cents.
GRAINS AND SOYA: Wheat prices gained slightly on hopes of new orders from Egypt, while soya also rose due to concerns about crop yield in the US Midwest region.
In contrast, bumper crops of US maize helped push these prices lower.
On LIFFE, the price of a ton of wheat for November delivery was virtually unchanged at 87.50 pounds from 87.70 a week earlier.
In Chicago, wheat for December delivery rose to 336.25 cents a bushel from 327.25.
Maize for December delivery weakened to 214.75 cents a bushel from 221.75.
Soyabeans for November delivery rose to 725.50 cents a bushel from 692.50.
October-dated soyabean meal — used in animal feed — gained to $217.90 per ton from 206.20.
COTTON: Cotton future powered to levels not seen in five years due to mounting concern about Chinese production in the wake of torrential rain storms.
The bad weather which hit China’s main cotton producing regions of Xinjiang and Henan meant that expectations for the country’s crop were being scaled back, said Refco’s Prendergast.
On Monday, Chinese state media reported that days of downpours had killed 13 people in Henan province alone, as well as harming crops.
The market is still focused on what is happening with China, Prendergast said.
New York’s December contract climbed to 74.09 cents a pound on Thursday from 69.80 the previous week.
The Cotton Outlook Index of physical cotton, the average of the world’s lowest prices, gained to 70.25 cents from 67.40.
WOOL: Wool prices finally reined in their recent sharp fall caused by the rise of Australia’s dollar against the US dollar, as the American unit steadied.
Unsold stocks are reported to be rising as growers resist the recent downward trend in the market, the Australian Wool Industries Secretariat said in its weekly market round-up.
The Australian Eastern index edged back to 8.38 Australian dollars per kilo from 8.41 dollars the previous week.
The British Wooltops index slipped to 511 pence from 513 pence.—AFP
