LONDON, Feb 16: Gold glowed again this week as prices held up close to $300 an ounce, the precious metal basking in its rediscovered safe-haven status.
With jitters about accounting irregularities buffeting stock markets, and a new-found love affair with gold among nervous Japanese investors showing little sign of abating, prices are close to two-year highs.
No such luck for base metals, whose fate depends on the strength and timing of a global economic recovery, the chances of which remain far from clear.
In the oil market, prices made headway as one oil major signalled good demand for crude, and tension between the United States and Iraq helped shore up prices.
GOLD: Gold prices held firm around $300 an ounce this week, as the factors that helped it surge the previous week remained in play.
By Friday afternoon, an ounce of bullion was fixed at 299.85 dollars an ounce from $304.30 a week earlier.
Experts said that few investment funds were prepared to bet against gold at the moment. The flood of interest in the precious metal because of the weakness of other asset classes, particularly in Japan, continues to provide support, they say.
Japan has been very important over the last few weeks in the gold market largely because of confidence problems, noted Howard Patten, a metals expert at Barclays Capital. Confidence in the national currency is weak and gold prices in yen terms are doing very well.
The outlook remains somewhat mixed however.
There is still a bit of a question mark over the way it is going to go but nobody really wants to go forward first, Patten told AFP. A lot of people are standing back and waiting to see what the direction is, and that is helping it.
The recent spurt in gold prices marks a reversal in the fortunes of the previous metal, which has languished around $270 for most of the past two years.
But greater investor uncertainty and lower interest rates lifted investment demand by eight per cent in the fourth quarter of 2001, the World Gold Council said this week.
Overall, however, global gold demand was down two per cent in the fourth quarter, and two per cent lower in the whole of 2001 from 2000.
Demand may remain fragile in the first months of 2002 but I look forward to much stronger results later in the year as the global economy recovers, said WTC chief executive Haruko Fukuda.
SILVER: Silver prices wrested back more ground this week, supported by gold and helped along by rising lease rates a reflection of tightness in the lending market, which often sends market players scurrying to actually buy the metal instead of borrowing it.
An ounce of silver rose to $4.58 on Friday afternoon from 4.38 the previous week.
PALLADIUM AND PLATINUM: The platinum group metals had a mixed week, platinum finding support due to tightness in the lending market, while palladium still struggled to shake off gloom over the industrial outlook.
Platinum prices were testing the $480-an-ounce mark, without ever really scaling the threshold, and by Friday were quoted at $477 an ounce from 474 a week earlier.
Palladium pushed above $390 an ounce at one point, only to fall back. By Friday afternoon, an ounce of the metal was going for $380 an ounce from $373 the previous week.
Palladium isn’t having as good a time of it, noted Patten. There is still a feeling that for its industrial uses there is still a weak picture.
BASE METALS: The base metals complex failed to make much sustained headway this week, as prospects for economic recovery remained mixed at best and supply-side questions preyed on some metals.
Copper and aluminium ran up good gains early in the week, but the aluminium rally went into reverse on Thursday and left prices lower than they were before they started rising.
Aluminium is ending the week largely unchanged, noted Patten. It had a pronounced spike above 1400 (dollars a tonne), but there has been speculation that production in the Pacific northwest (of the United States) could be re-started, and that has knocked prices down to a more realistic level.
Three-month aluminium prices were quoted as $1,381 a ton on Friday afternoon from $1,384 a week earlier.
Copper also succumbed to a late-week correction as buying by investment funds dried up. Three-month prices stood at $1,617 a ton on Friday, from $1,605 the previous week.
As for other metals, Patten said it is largely a case of waiting for consumers to reappear in a serious volumes.
The zinc market continued in woebegone fashion, with prices level at $791.
OIL: The oil market perked up this week as one oil major signalled good demand for crude, and tension between the United States and Iraq kept a floor under prices.
By Friday afternoon a barrel of Brent North Sea crude for April delivery stood at $20.98 barrel, compared to $19.97 the previous week.
In New York, March-dated light sweet crude futures were quoted at $21.10 a barrel from 19.85 the previous week.
Prices were helped early in the week by an indication from Anglo-Dutch giant Royal Dutch/Shell that it expected to have demand for the entire Brent production in March.
Prices climbed further in response to a warning from US President George W. Bush that he would keep “all options available” for dealing with Iraq — a major oil exporter.
The threat of action against Iraq usually pushes prices up as the Baghdad regime has frequently halted exports in the past when squaring up to western powers and would almost certainly do so again.
The possibility that other oil producing Arab countries might also withhold supplies in support of Iraq also lurks at the back of traders’ minds, though most analysts believe the chances of such a move to be remote. Some even feel that US action is still fairly remote.
US action, if it ever takes place, is likely to be months away, and there is a limit to the patience of oil traders on this issue, said Lawrence Eagles, an analyst with the GNI brokerage.
But there is no doubt that an attack on Iraq would push up oil prices, and therefore as long as the threat of an attack is there, traders will become increasingly reluctant to hold short positions over weekends and holidays, he added.
RUBBER: Rubber prices held firm in a quiet market with many traders absent because of Chinese new year celebrations.
In Kuala Lumpur, the RSS index ended Thursday at 2.40 ringgit per kilo from 2.375 the previous week.
COCOA: Cocoa prices rallied to their highest levels for more than three years as traders fretted about when deliveries from number one producer Ivory Coast might run dry.
COFFEE: Coffee prices dipped in New York, but made some headway in London as technical activity ahead of the expiry of the March contract next week provided support, traders said.
SUGAR: Sugar prices were on a backfoot again this week, skidding to the lowest level in almost two years in New York as the prospect of a bumper Brazilian harvest cast a shadow over the market.
Once they start selling like this they establish a self-fulfilling trend, he told AFP.
But on the LIFFE market in London, a ton of white sugar for May delivery managed a rise to $212.50 on Thursday from $209.00 a week earlier.
GRAINS: Grain prices remained weak after figures showed a recent slide in US export figures, which had been expected by the market.
US wheat exports fell 22 per cent in the week to February 7 from the previous week, to 438,000 tons, the US agriculture department reported.
Maize exports fell by 25 per cent to 1.045 million tons. In Chicago, a bushel of wheat for March delivery slipped to 280.75 cents from 281 cents a week earlier.
COTTON: Cotton prices had bad week, slumping seven per cent in just one day in New York on trade selling.
But prices later recovered some poise. In New York, the March contract stood at 36.31 cents a pound on Thursday, down from 38.25 cents the previous week.
The Cotton Outlook Index of physical cotton, the average of the world’s lowest prices, stood at 43.70 cents from 43.45 cents.
Analysts at the Refco brokerage said prices slumped on Wednesday as trade selling attracted all-round speculative selling and the market snowballed lower on stop-loss selling.
WOOL: The wool price rally showed no sign of running out of steam, as the release of keenly awaited Chinese import quotas drove prices higher.
China, the leading importer of Australian wool, announced a five-per cent increase in import quotas for 2002 from 2001, to 337,000 tons.—AFP