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THE gold prices came close to a three-year high on February 9, hitting $308 an ounce in Asian trade and fixing at $304.30 an ounce in London, up more than $20 than the previous week. The recent rally was a steady climb rather than the sharp explosions and pull-backs seen over the last couple of years.
The price rally is remarkable as it comes after months of sluggish gold price trends: with the exception of a brief blip following the events of September 11, the gold price has remained depressed in a range around $270 for much of the past two years. But the rally has been sustained by cash flooding through from other markets trembling once again and with few currencies looking like an attractive bet, gold once again was being favoured as a safe port in the storm.
The sudden upswing had been triggered by an announcement from the world’s largest gold producer, South African giant AngloGold, that it was cutting back on forward selling, indicating that it was growing more optimistic about prices. The decision to end full state protection of bank deposits in Japan in April has also driven investors there to buy the metal, fuelling record trading volumes on the Tokyo Commodities Market.
Gold experts have become exasperated by the precious metal’s performance in recent years. Persistently weak prices persuaded many that billion was no longer the store of value that it had been for centuries. But gold has still proven its worth in times of recent economic trouble. The Asian financial crisis of 1997 and the turbulence unleashed last year by the terrorist attacks on the United States gave bullion a clear uplift.
Meanwhile, gold imports into India, the world’s largest bullion market, have come to a complete halt due to volatile global prices and traders expect activity to pick up only after prices stabilize. India imported 359.3 tons of gold in the first half of 2001, from 267.2 tons in the same period of the previous year, the industry-funded World Gold Council said.
Soaring prices have also prompted people to sell their jewellery and old gold stocks. Gold demand in India rose to 490.4 tons in the first half of 2001 from 417.8 tons in the same period a year earlier.
Oil prices are falling on ongoing gloom about weak demand and growing stocks. The International Energy Agency (IEA) has trimmed its world oil demand estimate for the first quarter of 2002 by 200,000 barrels per day (bpd) to 76.4 million bpd. The IEA also cut its global oil demand growth forecast for 2002 by 60,000 bpd to 500,000 bpd, citing unseasonably warm January temperatures in key markets as the reason for adjustment. However, an economic recovery — already started — will gather momentum in the US around mid-year, causing a reversal in the current contraction in oil demand in the second half. Total US petroleum demand is expected to decline by 230,000 barrels a day in the first half of 2002.
Oil prices struggled under $20 a barrel as forecasts of weak demand cast a pall over the market. A barrel of Brent North Sea crude for March delivery stood at $19.55 a barrel, compared to $19.20 the previous week. In New York, March-dated light sweet crude futures were quoted at $19.85 a barrel from $19.30 the previous week. Prices were undermined by a reduced forecast by the US energy department’s Energy Information Administration for oil demand.
The total Opec output, including sanctions-bound Iraq, stood at 25.2 million bpd in January. With non-Opec supply forecast to grow by 940,000 bpd this year, there was little room left for increase in Opec production. Middle-East dominated Opec implemented less than half its promised cut last month, while its five partners fulfilled less than one of their pledged curbs.
Cracks have already appeared in Opec’s alliance with five other oil exporters to curb supplies and defend price against the recession. The IEA said that the five non-Open exporters sliced just 130,000 barrels per day from their output in January, having promised to curb exports by 462,500 bpd, Mexico and Norway fully complied with their promised curbs, but output in Russia and Angola rose while Oman was unchanged.
Most worrying for Opec, net exports of crude oil and products from the former Soviet Union, featuring Russia, Kazakhstan and Azerbaijan, soared by 760,000 bpd to 4.92 million bpd in January compared to the month before.
Jute prices have risen steadily by more than 16 per cent increase in the size of the 2001-02 harvest in India, which is the world’s largest producer of jute. Since October, strong demand from factories has pushed the prices of TD-5, the benchmark grade, up by Rs315 ($6.51), or almost 35 per cent a quintal, to Rs1,315 a quintal. Prices were likely to continue rising until March, ahead of land preparation and sowing for the next crop.
In Bangladesh, the world’s second-largest producer and the largest exporter of raw jute and jute products, the export price of BTR-Karachi, the Bangladeshi benchmark grade, is up by more than $40 a ton, or 19 per cent to $250 a ton, according to Sushil Kariwala, a leading importer.
The growing environmental concern in both countries is a potential source of domestic demand for fraw jute. Bangladesh recently put a ban on the production and use of polythene bags, and the Bangladesh Jute Mills Association is trying to gear up the industry so annual production can be lifted to more than 550,000 tons from the current level of about 475,000/- tons.
Cocoa
Cocoa prices pushed up to three-year highs, boosted by weak production levels in Ivory Coast and floods in Indonesia.
The output in world number one producer Ivory Coat is seen barely scraping one million tons in 2001-02, promising another global deficit to around 150,000 tons. Heavy rains in world number three producer Indonesia have also helped the prices.
It is mainly because of a second consecutive year of deficit on the Coca market after a second smaller crop in Ivory Coast.
On London’s Life financial futures exchange, the price of a ton of cocoa for March delivery climbed to 1,109 from 1,037 the previous week.
