Share this story!            

Gold, platinum hammer record highs amid US economic woes

LONDON: Gold and platinum soared to record peaks this week as the world’s commodity markets were rocked again by US economic woes, traders said.

The United States is a major consumer of raw materials and is the number one market for oil followed by number two China, so talk of a US recession has loomed large. However, gold and platinum enjoyed a wave of buying interest as investors sought a safe haven for their cash amid deepening fears of a US-led global economic slowdown.

Precious metals: Gold prices hit a historic $936.92 per ounce as the yellow metal was also boosted by the weakness of the dollar, analysts said. Friday’s record-breaking gold run beat the previous high of $933.33 set on Tuesday.

Platinum meanwhile jumped to an historic high of $1,764.50 an ounce. The weak US currency, which flirted with a record low point against the euro, makes dollar-priced commodities cheaper for buyers using stronger currencies.

And in recent days, power shortages in South Africa — a key producer of gold and platinum — have also paralyzed mining activity and put even more pressure on prices. Elsewhere, silver struck a 27-year high of $17.31 an ounce on the back of gold’s rise.

On the London Bullion Market, gold eased to $914.75 at Friday’s late fixing from $918.25 a week earlier. Silver jumped to $17.19 an ounce from $16.53. On the London Platinum and Palladium Market, platinum soared to $1,755 an ounce at the late fixing Friday from $1,681 a week earlier. Palladium climbed to $410.50 an ounce from $380.50.

Oil: Crude oil prices see-sawed this week, rising after another steep US interest rate cut, before falling back on more negative data on the beleaguered American economy. Traders took in their stride news that the OPEC crude exportears’ cartel had decided to maintain current output levels.

Prices jumped higher after the US Federal Reserve slashed a half-point from its key interest rate on Wednesday to ward off recessionary risks. However, oil hit reverse gear after the US government’s Energy Information Administration said crude stocks leapt 3.6 million barrels in the week to January 25 — the third straight weekly increase.

The market was further dampened as bad news piled up on the state of the US economy. On Thursday, the US government reported that jobless claims rose by 69,000 to 375,000 for the week ended January 26. Economists had only expected claims to rise to around 320,000.

Then on Friday, it emerged that the US economy lost 17,000 nonfarm jobs in January in a surprise drop in employment for the first time in over four years.

“Once again, concerns over a US economic slowdown return to the spotlight,” said analysts at research firm Action Economics.

Elsewhere Friday, OPEC left unchanged its oil production ceiling, snubbing US demands for an increase as the cartel focuses on supporting prices, which have fallen 10 percent since the start of the year. Explaining its decision, the Organisation of Petroleum Exporting Countries said that stockpiles of crude were likely to increase in the first half of 2008.

OPEC, which pumps 40 percent of world oil, decided to keep official daily output at 29.67 million oil barrels. Since striking a high above $100 at the start of the year, the price of oil has slid owing to fears of a US recession and a global economic slowdown.

But crude futures are still almost double the level of a year ago, having hit a record $100.09 in early January. On Friday, New York’s main oil futures contract, light sweet crude for delivery in March, fell to $89.86 per barrel compared with 90.95 dollars a week earlier. Brent North Sea crude for March eased to $90.51 from $90.83 a week earlier.

Base metals: Base metals prices rallied as another interest rate cut from the US Federal Reserve boosted hopes for rising American demand.

“Base metals look to have further upside in the near-term and an expected 50 basis point point cut by the Fed should see a further knee-jerk reaction in prices,” said UBS analyst Robin Bhar. afp

Home | Business

Share this story!