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LONDON, Sept 14: Oil and gold prices had a volatile week dominated by concerns about the threat of terrorist attacks on the first anniversary of the September 11, 2001 atrocities and the prospect of a war on Iraq.
Base metal prices managed to shake off concerns about the feeble strength of the global economic recovery to claw back some lost ground.
Grain prices continued to rally as a shortage of high-grade supplies pushed wheat prices up to five-year highs in Chicago.
GOLD: Gold prices ended a volatile week slightly lower as ongoing speculation about the timing of a possible war in Iraq and weak US economic data failed to propel the market to new highs following strong gains the previous week.
By Friday afternoon, gold was fixed at $318.85 an ounce on the London Bullion Market against $319.25 the previous week.
We have had a wave of indicators underscoring the weakness of the (US) economy, which is in general helpful for the yellow metal and its safe-haven status, said HSBC analyst Merlin Marr-Johnson.
But he added that with data showing the US current account swelled to a new record level in the second quarter, and in light of a downbeat speech by US Federal Reserve Chairman Alan Greenspan, traders had been disappointed by the reaction of the gold market.
SILVER: Silver prices crept higher, spurred on by technical buying following the recent steep decline in prices.
Silver was fixed on the London Bullion Market at $4.59 an ounce on Friday afternoon, against 4.53 the previous week.
Marr-Johnson said the market had been buoyed by the activity of several leading investment funds, who had been buying silver in order to square off their positions.
PLATINUM AND PALLADIUM: Platinum prices rose this week, thanks to continued healthy demand from US car makers.
There is relatively robust demand from the US automotive industry, Marr-Johnson said.
And Palladium prices were also higher, despite the market suffering from what Marr-Johnson described as a “structural excess”.
By Friday, an ounce of platinum stood at $553 on the London Platinum and Palladium Market against $545 a week earlier
Palladium prices rose to $336 per ounce from $331 a week earlier.
BASE METALS: Base metals prices rose this week despite a swathe of weak economic statistics and the absence of any signs of a pick up in industrial demand.
There is no fundamental motive for the rise in base metal prices, said BNP Paribas analyst Richard Chase, who explained the latest series of US economic statistics had further dented hopes of a healthy recovery in world demand.
Chase said base metal prices had been rising for the past month as investors envisaged “very limited” downside risk to prices at their present depressed level.
We’re certainly not going to see prices take off, but investors think the risk of a sharp fall are minimal, the analyst said.
He said in light of that there was mounting evidence that increasing numbers of investors had been buying back metals in order to flatten off their positions.
But Chase warned that the upside potential for the market appeared to be limited in the coming weeks until there was more tangible evidence of a pick-up in US economic activity.
On the London Metal Exchange (LME), three-month copper prices rose $40 to $1,526 per ton.
Three-month aluminium prices gained $10 to $1,332 per ton.
Among other base metals, three-month nickel prices climbed $170 to $6,890 per ton, zinc added $20 to $790 per ton, tin jumped $65 to $3,935, while lead eased four dollars to $434.
OIL: Oil prices endured a choppy week as the threat of terrorist attacks on the first anniversary of the September 11, attacks and the prospect of a US invasion of Iraq made for nervous trading conditions.
Prices rose in the early part of the week as concerns rose that a war on Iraq was around the corner and after the US Navy warned of possible attacks on oil tankers by the al-Qaeda network.
In London, the price of Brent oil rose above $29 a barrel briefly on Tuesday for the first time in almost a year.
But prices fell toward the weekend after US President George W. Bush’s demand for a new UN resolution on Iraq was taken as a sign that an attack on Baghdad might be further away than previously thought.
Traders had been fearing a declaration of intent to invade Iraq, so the decision to seek a further UN resolution to insist that Saddam complies was less hawkish than many had expected, said GNI analyst Lawrence Eagles.
Brent crude for October delivery stood at $28.00 a barrel, down from $28.66 a week earlier.
In New York, October-dated light sweet crude futures traded at $29.20 from 29.72 a week earlier.
Traders were also still guessing what decision ministers of the Organization of Petroleum Exporting Countries (Opec) would take when they meet in Japan on Thursday to discuss output.
Consumers are demanding an output hike, but Opec secretary general Alvaro Silva said the market was adequately supplied, with sufficient oil stocks to meet demand in the coming months.
Stocks are at a sufficient level with moderate international economic growth, Silva told the Spanish economic newspaper Expansion.
The US energy department meanwhile reported that crude oil stocks fell 5.3 million barrels, or 1.8 per cent, to 293.2 million in the week ended September 6 from the previous week.
Gasoline stocks declined 300,000 barrels to 205.6 million, while distillate fuel inventories increased 4.0 million barrels to 133.6 million.
RUBBER: Rubber prices gained ground again though high prices deterred some physical buying, traders said.
It was a bit nervous, people weren’t sure whether to buy and to give up or whether the prices were going to come down because it had gone too far, said Symington broker Martin Hampson.
It seems that there is some consumer demand which hasn’t been fulfilled yet ... but because the prices are so high they’re not prepared to buy at the moment, he added.
In Kuala Lumpur, the RSS index rose to 3.520 ringgit per kilo from 3.515 ringgit the previous week.
COCOA: Cocoa prices resumed their recent upward trend following the technical correction of the previous week, bolstered by the prospect that this year’s crop will be insufficient to meet demand for the third year running.
Prices continue to be supported largely by commercial buying, said Refco analyst Ann Prendergast.
However, she added that buyers remained cautious given the risk that the market might correct from its present overbought level.
On LIFFE, London’s financial futures exchange, the price of cocoa for December delivery firmed to 1,424 pounds a tonne on Thursday from 1,402 pounds the previous week.
On the CSCE, the New York futures market, the December contract rose $34 per ton to $2,034.
COFFEE: Coffee prices extended recent gains, pushing up to new one-year high points on technical factors and speculation of a possible reduction in forecasts of the size of the 2002/03 crop.
Refco analyst Prendergast said with some people speculating that a recent options trade by the Brazilian government would cut world supply, at least in the short term, some traders were speculating that prices could rise as high as 70 cents per pound by the year end.
On LIFFE, Robusta quality for November delivery climbed to $606 a ton on Thursday from $533 the previous week.
On New York’s CSCE market, Arabica for December delivery rose to 56.70 cents a pound on Thursday from 52.70 cents the previous week.
SUGAR: Sugar prices raced higher again thanks to technical factors and speculative buying, traders said.
We’ve seen quite a lot of fund buying, I think that technical signals were very good, said Czarnikow broker John Kovaks.
People may be scaling back slightly their views of Brazilian crop and exports, he added.
On LIFFE, a tonne of white sugar for October delivery rose to 202.50 dollars on Thursday from 187.50 dollars a week earlier.
On the CSCE in New York, a pound of unrefined sugar for October delivery climbed to 6.75 cents from 6.14 cents the previous week.
SOYA: Soya prices rode up to their highest level for three and a half years on forecasts of a disappointing US harvest because of insufficient rain, traders said.
The US agriculture department estimated that US production of soya beans for the 2002/03 harvest would be 72.28 million tons, less than analyst expectations of 72.71 million tons.
On the Chicago Board of Trade (CBoT), a bushel of soya for September delivery rose to $5.78 on Thursday from 5.65 a week earlier.
Soyabean meal — used in animal feed — for September delivery jumped to $186.30 per ton from 182.90 the previous week.
GRAINS: Grain prices rallied again, with the price of wheat hitting a five-year high in Chicago, as a dearth of high-quality supplies owing to unfavourable weather in producer regions showed little sign of abating.
Crops in the United States have been blighted by a disastrous combination of parched periods followed by heavy rains that have resulted in the worst wheat harvest since 1978.
Production is expected to slump to 45.89 million tons in the 2002/03 season, according to the US agriculture department, from 70 million tons the previous harvest.
According to official forecasts released this week, Australia’s winter wheat crop is seen falling to 13.5 million tons which would be the country’s poorest harvest since 1994/95 from 24 million last year.
On LIFFE, the price of a ton of wheat for September delivery rose to 62.25 pounds from 59.0 a week earlier.
In Chicago a bushel of wheat for September delivery picked up to 409.00 cents from 386.50 cents a week earlier.
A bushel of maize in Chicago for September delivery gained to 274.25 cents from 272.00 the previous week.
COTTON: Cotton prices lurched lower again owing to technical selling, which overshadowed solid US exports, traders said.
Cotton futures broke through technical support ... and fell below 44 cents, said analysts at brokers Refco.
Sell stops were hit all the way down as longs fled, they added.
That outweighed the positive impact of strong export sales, which rose sixfold from the previous week to 364,600 bales, the US agriculture department reported.
In New York, the December contract eased to 43.49 cents a pound on Thursday from 45.64 the previous week.
The Cotton Outlook Index of physical cotton, the average of the world’s lowest prices, dropped to 49.15 cents a pound from 49.70 the week before.
WOOL: Australian wool prices made their biggest weekly gain of the season, with auction prices rising by 3.1 per cent on average, according to the Australian Wool Industries Secretariat (AWIS).
Demand was well spread around strong support for the fine wool offering and purchases for China less dominant than we have become used to, AWIS said.
There was good support from the topmakers and evidence of business being done for Europe, India and Taiwan, it added.
The Australian Eastern index rose to 974 cents from 941 a week earlier.
The British Wooltops index gained to 479 pence from 477. —AFP
