Commodities - March 17, 2006
March 17, 2006
Metals
London - Gold fell yesterday, erasing earlier gains as a decline in crude oil prices eroded its appeal as a hedge against inflation.
The metal rose as much as 18 percent last year, partly because investors bought gold as a hedge against surging energy costs.
"Inflationary pressures are not high enough to support gold prices," said Yu Yingxi, a precious metals analyst at Barclays Capital in London.
Gold was fixed at $553.25 (R3 420) in London yesterday, $3.25 lower than its second fix on Wednesday. Prices earlier gained as much as 0.6 percent. The April contract dropped $1.90 to $552.80 on the Comex division of the New York Mercantile Exchange.
Gold declined even as the US military and Iraqi forces launched the largest air assault in Iraq since the March 2003 invasion. "Any geopolitical event should normally support gold," Yu said. "There is a lack of direction in the market at the moment."
Some investors buy gold in times of inflation to preserve purchasing power. The precious metal surged to $873 an ounce in New York in 1980, when consumer prices jumped more than 12 percent. In January 1981, gold was as high as $612.
Platinum fell $2 to $1 028. Palladium also fell $2 to $314 while silver dropped 3c to $10.28 an ounce. - Bloomberg
Oil
London - Oil fell yesterday after a fifth weekly increase in US fuel inventories pushed them to the highest level for nearly seven years.
At the close in London, Brent crude was 61c lower at $62.33 a barrel (R2.42 a litre), while US crude had dropped 27c to $61.90.
Fears stocks could be swiftly drained by threatened supply disruption and strong demand during the US driving season in the northern summer was expected to curb selling.
"Prices are likely to remain firm to firming during the spring," said First Energy Capital analyst Martin King. "It still remains a question of when, not if, crude oil prices reach $70 a barrel."
On Wednesday US crude prices ended a two-day rally, dropping 93c in response to government data showing a 4.8 million barrel rise in overall crude inventories to their highest level since the end of May 1999. Stockpiles of refined products fell last week, however, and demand held strong, adding to nervousness about the impact of new environmental regulations on petrol supplies to US drivers.
While traders have been reluctant to push the market too high because of high inventories, nervousness about the future has made them wary of a deep selloff. Japan's biggest refiner, Nippon Oil, said on Wednesday it had cut imports from Iran due to the heightened political risk there. - Reuters
|
|
