Tokyo rubber futures hit another 14-month high on Thursday as strength in other commodities, particularly gold, ignited buying from speculators and boosted prices of tyre grades. TOCOM's rubber contract for May 2010 delivery rose as high as $262.9 yen per kg before settling at 260.7 yen, up 5.1 yen from the previous settlement.
TOCOM's most active rubber contract has gained more than 70 percent so far this year. Asian physical rubber prices rose more than 1 percent on gains in Tokyo futures, with benchmark RSS3 offered at $2.82 a kg. "I don't know why but rubber seems to be following gold at the moment. From a technical perspective, rubber should be targeting the next level around 273 yen," said a dealer in Tokyo, referring to a level last seen in October 2008.
Gold hit record highs over $1,225 an ounce as the precious metal continued to attract investors looking for an alternative to the dollar. Indonesia's SIR20 was traded late on Wednesday at $1.25 to $1.2525 US cents per pound for January shipmment. The grade was higher at $1.27 per pound on Thursday, reflecting gains in the physical market.
"We've seen some deals overnight and it looks like the market is very strong. But I also notice that buyers start to get reluctant to enter the market because of the price," said a dealer in Indonesia's main growing island of Sumatra.