LONDON, Dec 14: Oil prices swung higher again this week as a strike crippled Venezuelan exports and the OPEC oil cartel agreed to curb output, while the shadow of Iraq loomed large over the market.
A weaker dollar drove gold prices up to a three-year peak, though base metals failed to capitalize on the weaker US unit as economic uncertainty deterred buyers.
Cocoa prices forged higher for the fifth week in a row as unrest continued in number-one producer Ivory Coast.
GOLD: Gold prices raced up to three-year highs in response to a weaker dollar and geopolitical concerns.
On the London Bullion Market, the spot price of an ounce of gold rose to as high as 337 dollars an ounce on Friday, levels last seen in October 1999, analysts said.
Gold prices were fixed at $332.20 per ounce on the London Bullion Market on Friday afternoon against 325.75 dollars the previous week.
It’s quite simply dollar weakness, said HSBC analyst Merlin Marr-Johnson, explaining the rally.
If you look at gold over the last 20 years you can correlate it totally with the health of the US economy.
Now we’re getting to the stage where it’s hard to find reasons to sell gold, he said.
SILVER: Silver prices rose in the slipstream of gold.
Silver was fixed on the London Bullion Market at $4.7425 an ounce on Friday afternoon against 4.6525 the previous week.
PLATINUM AND PALLADIUM: Platinum prices also hitched a lift higher with gold, though gloomy fundamentals meant that palladium missed out on the party.
By Friday, an ounce of platinum traded at $602 on the London Platinum and Palladium Market, up from $596 the previous week.
Its move back above 600 is almost entirely on the back of gold, said SG Securities analyst Stephen Briggs.
That doesn’t mean that there aren’t good reasons to think that platinum looks good. I think the market is already tight and is going to get a lot tighter, he added.
Palladium fell to $239 per ounce from 248 dollars a week earlier.
BASE METALS: Most base metal prices remained under pressure in line with copper as global stock markets fell back and investors remained cautious about the outlook for the US economy.
SG Securities analyst Stephen Briggs said prices had been held back by weakness in equity markets.
They have not really derived much benefit from the weakening of the US dollar, he added.
OIL: Oil prices shot higher after the Opec producer cartel agreed to rein in output and as concerns mounted about the impact of the crisis in Venezue la, the world’s number five exporter.
By Friday afternoon, benchmark Brent North Sea crude oil for January delivery had risen to $27.25 a barrel here against $25.92 a week earlier.
In New York, January-dated light sweet crude futures traded at $28.52 up from $27.23 a week earlier.
Brent continues to push higher after Opec’s decision to cut output, said analyst Andrew Whittock at brokers Williams de Broe.
The Organization of Petroleum Exporting Countries (Opec) announced Thursday it would cut output in line with a new, raised official ceiling of $23 million barrels per day.
The revised quotas could theoretically result in a cut of between 1.2 and 1.7 million barrels per day if they are adhered to, although analysts warned that the key test was yet to come.
GNI analyst Lawrence Eagles was sceptical OPEC members such as Algeria, Libya, Nigeria and Venezuela would toe the line, and warned the boost to oil prices could prove short lived.
RUBBER: Rubber prices edged lower as dealers shied away from taking out new positions ahead of the start of the new year.
Analysts added that trading volumes were subdued owing to further holidays in both Indonesia and Thailand.
People are waiting for the new year before adopting new positions, said Symington analyst Martin Hampson.
In Kuala Lumpur, the RSS index fell to 3.120 ringgit per kilo from 3.155 the previous week.
COCOA: Cocoa prices forged higher for the fourth successive week in London as tensions between rebel soliders and forces loyal to the government bubbled away in Ivory Coast, the world’s leading producer.
ABN Amro trader Jean-Michel Boehm said the rally in prices was entirely the result of the deteriorating situation in Ivory Coast.
He said events in the west African country had triggered heavy buying by both speculators and industrial users of the commodity.
On LIFFE, London’s financial futures exchange, the price of cocoa for March delivery climbed to 1,335 pounds a ton on Friday from 1,246 the previous week.
COFFEE: Coffee prices slumped as speculators liquidated positions after the US Department of Agriculture (USDA) lifted its forecast for Brazilian production in 2002/03.
We’ve seen some heavy fund liquidations in both (the London and New York) markets, said CommodityExpert.com analyst Caroline Eagles.
The speculative sales by funds followed news that the USDA had lifted its estimate for the current season’s crop in Brazil to 51.6 million sacks.
Eagles said that was well above the USDA’s previous forecast.
SUGAR: Sugar prices edged lower in quiet technical trade ahead of the holiday period.
The market hasn’t seen any sustainable direction and is trading within its recent range, said Czarnikow analyst John Kovaks.
The sugar market is finding respite after a choppy period of trading, having swung from one-year highs to seven-week lows in recent weeks.
Looking forward, Kovaks said trade was likely to be quiet, as dealers wound down their activity in the run up to the holidays.
On LIFFE, a ton of white sugar for March delivery slipped to $210 on Thursday from $212.6 a week earlier.
On the CSCE in New York, a pound of unrefined sugar for March delivery fell to 7.47 cents from 7.54 cents the previous week.
GRAINS: Wheat prices ceded ground in Chicago on fund selling, despite some supportive figures from the US agriculture department, traders said.
But US maize prices pushed higher, as did wheat prices in London.
In Chicago a bushel of wheat for December delivery declined to 345.50 cents from 347 cents a week earlier.
A bushel of maize in Chicago for December delivery firmed to 236 cents from 234 the previous week.
On LIFFE, the price of a ton of wheat for January delivery rose to 59.65 pounds from 59.20 a week earlier.
COTTON: Cotton prices ticked higher but failed to cash in significantly on better-than-expected US weekly export figures.
Failed follow-through buying and trade selling capped the market after initial belief that the market would rally on good US department of agriculture (USDA) export data, said Refco analyst Ann Prendergast.
The market has weakened technically and we think it may consolidate around these levels, she added.
In New York, the March contract rose to 49.22 cents a pound on Thursday from 48.80 the previous week.
The Cotton Outlook Index of physical cotton, the average of the world’s lowest prices, edged up to 55.50 cents from 53.55 cents.
WOOL: Australian wool prices held steady.
The market remained stable in the last auction of selling prior to the Christmas break, with wool prices dropping 0.4 percent, on average, at auction sales this week in Sydney, Melbourne and Fremantle, the Australian Wool Industries Secretariat said.
The Australian Eastern index stood at 11.65 Australian dollars per kilo on Thursday against 11.67 dollars a week before.
The British Wooltops index slipped to 573 pence from 581 pence.—AFP