The price of many commodities, including crude oil, gold and copper, rebounded last week as the market focused on tight supplies, strong demand and a weaker US currency.
Many commodities have plummeted since the middle of May, mirroring a downward trend on global stock markets, as investors seized on worries over higher interest rates to combat rising inflation. However, traders drew comfort on Thursday from the prospect of a pause in US interest rate hikes, following the Federal Reserve's decision to hike borrowing costs by a quarter-point to 5.25 percent.
The US currency weakened in reaction to the news, making dollar-denominated commodities cheaper for buyers using other currencies on world markets.
The development also diminished worries that higher global borrowing costs would curb economic growth and impact adversely on demand. On Friday, the Commodities Research Bureau's index of 17 commodities stood at 344.13 points, from 335.37 points the previous week.
GOLD: Gold prices vaulted above 600 dollars per ounce, for the first time in two and a half weeks, in the wake of soaring crude prices and a weaker US dollar.
"Strong oil prices as well as reaction to the Fed's 25-base-point rate hike have triggered gains across much of the commodities sector in the past 24-hours with gold regaining the 600-dollar mark," said James Moore, analyst for specialist website TheBullionDesk.com. On the London Bullion Market, gold prices jumped to 613.50 dollars per ounce at Friday's late fixing, from 579.60 dollars a week earlier.
SILVER: Silver prices rose in the wake of sister metal gold. The price of silver reached 10.87 dollars on Friday, which was last seen on June 13, but remained far below its 26-year high of 15.22 dollars, which was hit on May 11.
"Having cleared 10.65 dollars and with copper making headway, silver could now be looking to work towards resistance pegged at... 11.55 dollars," Moore added.
On the London Bullion Market, silver prices climbed to 10.70 dollars per ounce at Friday's fixing, from 10.09 dollars the previous week.
PALLADIUM AND PLATINUM: Platinum forged ahead, mirroring gains by gold and silver, while palladium firmed. Platinum on Friday touched 1,227 dollars per ounce, last seen June 8, but traded far below its record high of 1,340 dollars hit on May 12.
In Friday trading on the London Platinum and Palladium Market, platinum leapt to 1,226 dollars per ounce at the late fixing, from 1,169 dollars the previous week. Palladium rose to 312 dollars per ounce on Friday from 303 dollars the previous week.
BASE METALS: The price of base metals, including copper and aluminium, bounded upwards after seven weeks of heavy falls as the market focused again on stretched supply and keen demand.
"Low inventories, strong demand and numerous supply problems continue to provide underlying support to prices and we still see significant upward potential for prices over the second half of 2006," said Barclays Capital analysts.
On Friday, three-month copper prices on the London Metal Exchange soared to 7,431 dollars per tonne from 6,598 dollars the previous week. Three-month aluminium prices gained to 2,596 dollars per tonne from 2,438 dollars the previous week.
Three-month nickel prices climbed to 21,250 dollars per tonne from 19,300 dollars.
Three-month lead prices rose to 992 dollars per tonne from 955 dollars.
Three-month zinc prices surged to 3,260 dollars per tonne from 2,881 dollars.
Three-month tin prices soared to 8,080 dollars per tonne from 7,830 dollars.
OIL: Crude futures raced ahead, supported by US gasoline supply fears, strong American and Chinese demand and persistent concerns on the nuclear energy standoff with Iran.
Those gains were extended following news from the US Department of Energy of steep falls in both motor fuel and crude stockpiles. That was also combined with strong US demand data for motor fuel. World oil prices are now within two dollars of historic levels.
Last April, New York crude had hit a record 75.35 dollars, while London Brent had struck 74.97 dollars in May, on the back of heightened concerns over Iran.
Gasoline stocks are taking a pounding amid the ongoing peak-demand driving season, during which many Americans fill their tanks and hit the roads for their summer holidays.
With an estimated 35 million Americans expected to take to their cars over the Independence Day July 4 holiday weekend, the country's gasoline stocks are forecast to be further stretched.
According to the DoE, demand for gasoline rose 1.2 percent in the week that ended June 23 to 9.54 million barrels per day, matching a record high set in August 2005.
Gasoline stocks in the US had fallen by one million barrels, compared with market expectations for a rise of 450,000 barrels. Crude oil reserves fell by 3.4 million barrels - triple market expectations. Elsewhere, world powers are pursuing diplomatic efforts to persuade major crude producer Iran to suspend its nuclear energy activities.
On Friday in London, a barrel of Brent North Sea crude for delivery in August rose strongly to 73.16 dollars per barrel, from 70.18 dollars the previous week.
In New York, a barrel of crude for delivery in August surged to 73.90 dollars per barrel on Friday from 71.05 dollars the previous week.
RUBBER: Rubber prices firmed. "The supply side is not quite up to full production, there are still some disruptive rains in the east" in major producing Asian countries, said Corrie Maccoll analyst Rashid Ahmed.
Prices had struck a fresh record high of 323 yen per kilo in Tokyo on June 13 before sliding on profit-taking.
On TOCOM, Tokyo's commodity exchange, natural rubber for October delivery rose to 306.70 yen per kilogramme on Friday, from 304 yen a week earlier. Singapore's RSS 3 October contract gained to 263 US cents per kilogramme on Friday, from 258.50 cents a week earlier.
COCOA: Cocoa prices in London hit their best level since February, while New York prices reached the highest point since January, as speculative buyers ploughed into the market. On the Liffe, London's futures exchange, the price of cocoa for September delivery rose to 955 pounds per tonne on Friday, from 923 pounds a week earlier.
On the New York Board of Trade (NYBoT), the September contract advanced to 1,635 dollars per tonne on Friday, from 1,547 dollars a week earlier.
COFFEE: Coffee prices climbed to a seven-week peak in London, supported by speculative buying, but remained under pressure in New York due to forecasts of a big crop in major producer Brazil. "US forecaster Meteorologix said that they expected warmer temperatures again fairly soon and also did not expect any frost damage," Sucden analysts noted. On Liffe, Robusta quality for September delivery rose to 1,220 dollars per tonne on Friday, from 1,148 dollars a week earlier. On NYBoT, Arabica for September delivery advanced to 99.10 US cents per pound on Friday, from 96.90 cents.
SUGAR: Sugar prices in New York were lifted by soaring crude futures.
"Despite the fact that supply and demand is roughly in balance at the moment, we could see some further strength in sugar as a result of the recent surge in oil prices," Sucden analysts said. Sugar cane is used in the manufacture oft ethanol, a cheaper alternative to gasoline, which is refined from crude oil. On NYBot, the price of unrefined sugar for October delivery increased to 16.34 US cents per pound, from 16.10 cents.
On Liffe, the price of a tonne of white sugar for August delivery eased to 463.20 dollars, from 464 dollars a week earlier.
GRAINS AND SOYA: Wheat, maize and soya prices rose as traders looked to the skies and tracked the weather. "Forecasters are calling for warmer temperatures and less rainfall to start July," Allendale analyst Rich Nelson said. "That's supportive for corn, beans and especially wheat," he added. On the Chicago Board of Trade, the price of wheat for July delivery climbed to 3.73 US dollars per bushel on Friday, from 3.66 dollars a week earlier.
Maize for July delivery firmed to 2.33 dollars per bushel on Friday, from 2.30 dollars. July-dated soyabean meal - used in animal feed - rose to 5.92 dollars per tonne on Friday, from 5.82 dollars. On the Liffe, the price of a tonne of wheat for July delivery climbed to 81 pounds on Friday, from 78.50 pounds.
COTTON: Cotton prices eased, but falls were limited by persistent dry weather in the United States.
On the New York Cotton Exchange (NYCE), the July contract dropped to 48.40 US cents per pound on Friday, from 49.20 a week earlier. The Cotton Outlook Index of physical cotton declined to 54.15 US cents on Thursday, from 55.45 US cents a week earlier.
WOOL: Wool prices firmed in key producer Australia. "The week finished on a strong note after a steady start," the Australian Wool Industries Secretariat said. The Australian Eastern index closed at 7.29 Australian dollars per kilo on Thursday, compared with 7.25 Australian dollars a week earlier. The British Wooltops index stood at 398 pence on Thursday, unchanged from a week earlier.
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