Gold glistened last week, striking a record peak as investors hunted for a safe-haven amid violent unrest in Libya that has sparked fears about spreading instability in the Middle East and North Africa. New York crude crossed $104 per barrel to reach the highest level for two and a half years, as the African nation was forced to slash exports.
"Geopolitics and the uncertainty and volatility associated with it continues to set the tone for oil price dynamics," said Barclays Capital analyst Sudakshina Unnikrishnan. "Unrest in the MENA region continues apace, with Libya effectively remaining out of the oil market; while the replacement of the lost Libyan barrels is eating into spare capacity, rampant demand growth is adding further pressure."
The Middle East and North Africa (MENA) area has been rocked by unrest since an uprising in Tunisia in January brought down the government there and led to similar protests in Egypt which ousted president Hosni Mubarak last month. Commodities won further support on Friday as the euro bounced above $1.40 for the first time in nearly four months, after a surprise drop in the US unemployment rate and accelerated job creation. A struggling greenback makes dollar-priced commodities cheaper for buyers holding rival currencies. That tends to stimulate demand.
PRECIOUS METALS: Gold rocketed to an all-time peak at $1,440.32 per ounce on Wednesday, while silver struck a 30-year pinnacle of $35.36 on Friday. "Gold and silver prices have continued to test all-time and 30-year highs respectively as a flight to safety has boosted interest on the back of a combination of the ongoing unrest in the Middle East, higher oil prices, inflationary fears and a weaker dollar," added Unnikrishnan.
The precious metals draw strength in times of geopolitical turmoil and higher inflation because they are regarded as a safe store of value. By late Friday on the London Bullion Market, gold rose to $1,427 an ounce from $1,402.50 a week earlier. Silver increased to $34.43 an ounce from $32.54. On the London Platinum and Palladium Market, platinum climbed to $1,828 an ounce from $1,791. Palladium rose to $811 an ounce from $785.
OIL: New York crude surged to $104.32 on Friday, hitting a level last seen on September 29, 2008, as violence escalated in Libya. Libyan forces loyal to strongman Moamer Kadhafi killed and wounded rebels trying to advance on Tripoli and claimed to have recaptured a town close to the capital Friday, rebel and government sources said.
A doctor at one of the hospitals in rebel-held territory, where casualties were being treated from the fierce clashes round the refinery town of Raslanuf, said there were "many dead and wounded" by rocket fire from loyalist defenders. "Libya is falling apart and Kadhafi's attempts to stitch it back together are making the oil situation worse," said Deutsche Bank analyst Adam Sieminski.
"It seems likely that soon there will be no oil export at all from Libya, a loss of 1.4 million barrels per day to the global markets, and a particular concern to refiners in Italy and elsewhere in Europe." The head of Libya's National Oil Corporation, Shukri Ghanem, told AFP on Thursday that the nation's production had "been halved".
In restive Yemen, troops also killed four protesters and wounded seven in the north of the country as nation-wide protests raged against President Ali Abdullah Saleh. "The real fear has been for a wider spread of the uprising across the MENA region with disruptions in oil production happening not just in Libya," SEB commodities analyst Bjarne Schieldrop said.
"There is little reason to believe that the problems are over in Libya - or that Libya will be the last of the MENA countries to experience these kinds of troubles. "Developments have taken place at high speed and high intensity across the MENA region so far and further developments are likely to take place sooner rather than later. We thus think that the oil price has further to go on the upside before this is over."
Brent oil jumped to $116.49 on Friday, but held underneath the 2008 peak of $119.79 that was forged last week. The contract trades higher than WTI partly because of high US energy inventory levels. "It's taken a while for the WTI contract to wake up to the potential stresses in the oil market," GFT analyst David Morrison told AFP.
"Early hopes of a quick resolution to the unrest in Libya have passed for now - and in the meantime the growing discontent is apparent in Bahrain, Yemen, Oman. "Now Saudi Arabia is coming into focus, and if demonstrations there escalate into outright violence, the whole Middle East could become unstable."
By Friday afternoon on London's Intercontinental Exchange, Brent North Sea crude for delivery in April rallied to $115.77 a barrel, compared with $111.57 a week earlier. On the New York Mercantile Exchange, Texas light sweet crude for April, known as West Texas Intermediate (WTI), delivery jumped to $103.45 a barrel, compared with $97.24 a week earlier.
BASE METALS: Prices mainly rose as traders took direction from the faltering US currency. "The weaker dollar was a factor in the market's strength, as were good US data and strong equities," said Fastmarkets analyst William Adams.
By late Friday on the London Metal Exchange (LME), copper for delivery in three months rose to $9,935 a tonne from $9,711 a week earlier. Three-month aluminium increased to $2,612 a tonne from $2,558. Three-month lead gained to $2,638 a tonne from $2,495. Three-month tin eased to $31,750 a tonne from $31,788. Three-month zinc slipped to $2,491.25 a tonne from $2,493. Three-month nickel rallied to $28,900 a tonne from $27,710.
COCOA: The market rocketed once again to the highest points for more than 30 years, driven by worsening unrest in top producer Ivory Coast. "Escalation of tensions in Ivory Coast keeps (the) cocoa market at record highs," said Standard Chartered commodities analyst Abah Ofon.
New York cocoa soared as high as $3,775 per tonne on Friday, touching a level last seen in early January 1979, while London prices neared the highest point in 33 years. UN Security Council powers on Thursday expressed alarm at the Ivory Coast conflict "spiraling" toward civil war and called on peacekeepers to do more to protect civilians.
The UN peacekeeping chief told how forces loyal to strongman Laurent Gbagbo opened fire with heavy machine guns on a demonstration by women in the latest violence to shock the international community. A top African envoy said however that the African Union must be given more time to find a settlement in the battle between Gbagbo and Alassane Ouattara, the internationally recognised winner of a presidential election last November.
By Friday on Liffe, cocoa for May rallied to £2,414 a tonne from £2,371 a week earlier. On NYBOT, cocoa for delivery in May increased to $3,766 a tonne from $3,637 a week earlier.
SUGAR: Prices gained ground. By Friday on the New York Board of Trade (NYBOT), the price of unrefined sugar for delivery in May rose to 30.62 US cents a pound from 27.64 cents a week earlier. On Liffe, London's futures exchange, the price of a tonne of white sugar for May increased to £759.30 from £699.50 a week earlier.
GRAINS AND SOYA: Prices climbed, with maize striking the highest level since July 2008. By Friday on the Chicago Board of Trade, May-dated soyabean meal - used in animal feed - rose to $14.04 a bushel from $13.75 a week earlier. Maize for delivery in May advanced to $7.31 a bushel from $7.22. Wheat for May increased to $8.26 from $8.11.
COFFEE: Prices scored multi-year peaks, hitting a 1977 high in New York, as traders fretted over low inventories. "Coffee continues to push higher, and unlike many of the other agricultural (commodities), has seen only a slight pullback in February," said MF Global analyst Edward Meir. "Fundamentally, things continue to remain strong. Supplies are lagging in a number of countries, while demand is steady.
"As a result, stocks have fallen to their lowest levels since the International Coffee Organisation started tracking them in the 1960s." By Friday on NYBOT, Arabica for delivery in May leapt to 277.30 US cents a pound from 266.55 cents a week earlier. On Liffe, Robusta for May rose to $2,403 a tonne from $2,328 a week earlier.
RUBBER: Malaysian rubber prices slid this week, in a technical correction following recent highs. The Malaysian Rubber Board's benchmark SMR20 fell to 520.40 US cents per kilo, from 540.05 cents last week.