Gold prices topped $1,500 last week for the first time on record due to concerns over rising global inflation and debt levels, while oil advanced in volatile trade. Markets will shut Friday on both sides of the Atlantic for the long Easter holiday break.
PRECIOUS METALS: The price of gold hit record highs above $1,500 as investors piled into the traditional safe-haven precious metal. Gold hit $1,509 an ounce on the London Bullion Market, with silver also rising to record a 31-year high of $46.25 an ounce.
"Gold prices traded through the $1,500 an ounce milestone ... on the back of inflationary concerns and sovereign debt uncertainty," said Barclays Capital analyst Suki Cooper. The metal is seen as a safe store of value in troubled economic and political times. "Gold remains comfortably underpinned with short-term inflation pressures and economic woes triggering some fresh safe-haven inflows," said Andrey Kryuchenkov, commodities analyst at Russian financial group VTB Capital. The dollar meanwhile fell against the euro on concerns over Washington's ability to tackle massive and growing debt in the world's biggest economy.
Gold began its run towards $1,500 on Monday after ratings agency Standard & Poor's revised its outlook on US sovereign debt to 'negative' from 'stable,' its first ever downgrade for the US. S&P's move challenged Washington's gold-star 'AAA'-rated standard as it warned that politicians seemed unable to agree a plan to reduce a huge budget deficit which is running at around 10 percent of gross domestic product.
The downgrade sent global share prices tumbling on Monday, coming amid growing concerns over global inflation, with China, India and the eurozone struggling to control prices. Metals consultancy GFMS forecasts that gold prices will soar past $1,600 this year, driven primarily by fears over high inflation.
Kryuchenkov said that gold "shot up after S&P downgraded the US sovereign debt outlook to negative. The move came on top of existing economic woes over resurfacing debt troubles in the eurozone." Gold has risen six percent since the start of the year, breaking a series of record highs along the way. It topped $1,000 for the first time in March 2008.
"Gold will remain well bid as long as the ongoing debt and inflation worries persist," Ian O'Sullivan, Spread Co trading group analyst told AFP. By late Thursday on the London Bullion Market, gold rose to $1,504 an ounce from $1,476.75 on Friday the previous week. Silver climbed to $46.02 an ounce from $42.61. On the London Platinum and Palladium Market, platinum increased to $1,812 an ounce from $1,787. Palladium dipped to $765 an ounce from $772.
OIL: Oil prices rose in a volatile week. Prices gained "following the weak US dollar that currently dominates and supports the oil market," said Myrto Sokou, an analyst at Sucden Financial brokers. "It should be noted that crude oil prices have gained almost $5 since the start of the week, showing that the upside rally continues to remain strong despite these uncertain and fragile economic conditions," she added.
Oil prices have made solid gains since slumping at the start of the week on the S&P US outlook downgrade. They were also hit as key industry bodies expressed concern about the impact of high energy costs on demand. Opec secretary general Abdullah El-Badri said the cartel was "concerned" by high oil prices while the head of the International Energy Agency, Nobua Tanaka, said "very high" levels may undermine economic growth and demand.
In response, Gulf oil producers assured consumers of sufficient supplies to help stem rises in prices, fuelled also by sweeping unrest in the Middle East and speculative trade. By late Thursday on London's Intercontinental Exchange, Brent North Sea crude for delivery in June was up at $123.47 a barrel from $122.57 on Friday the previous week. On the New York Mercantile Exchange, West Texas Intermediate (WTI) or light sweet crude for June stood at $111.71 compared with $108.42 for the May contract.
BASE METALS: Industrial metals prices were mixed as "the initial knee-jerk reaction towards the S&P downgrade" gave way "to more measured optimism alongside further strength in US macro data and a weaker dollar," said Barclays Capital analyst Gayle Berry.
By late Thursday on the London Metal Exchange (LME), copper for delivery in three months rose to $9,648 a tonne from $9,390 on Friday the previous week. Three-month aluminium climbed to $2,747 a tonne from $2,677. Three-month lead fell to $2,626 a tonne from $2,640. Three-month tin dropped to $32,625 a tonne from $32,950. Three-month zinc declined to $2,366 a tonne from $2,401. Three-month nickel was up to $26,651 a tonne from $26,081.
COCOA: Prices fell after recent gains caused by the political unrest in Ivory Coast, the world's largest producer. By Thursday on Liffe, London's futures exchange, cocoa for delivery in July dropped to £1,896 a tonne from £1,962 on Friday the previous week. In New York on the NYBOT-ICE, cocoa for July slipped to $3,084 a tonne from $3,130.
GRAINS AND SOYA: Prices were mixed. By Thursday on the Chicago Board of Trade, maize for delivery in July fell to $7.45 a bushel from $7.49 on Friday of the previous week. July-dated soyabean meal - used in animal feed - rose to $13.74 a bushel from $13.43 a week earlier. Wheat for July grew to $8.23 from $7.80.
COFFEE: Coffee prices struck 34-year highs at 300 cents a pound in New York on tight supplies, while futures fell in London. "Report of thunderstorms in Brazil's growing area added to the supply fears for Arabica beans," said The Public Ledger commodities publication. By Thursday on Liffe, Robusta for delivery in May stood at $2,426 a tonne compared with $2,445 for the July contract on Friday the previous week. On NYBOT-ICE, Arabica for July advanced to 298.20 US cents a pound from 287.75 cents.
SUGAR: Sugar prices steadied. By Thursday on NYBOT-ICE, the price of unrefined sugar for delivery in July edged up to 23.13 US cents a pound from 23.10 cents on Friday the previous week. On Liffe, the price of a tonne of white sugar for August was unchanged at £627.70.