Capital Gold Group Report: Commodity prices keep moving upward touching record highs
Daily Times
Sunday, April 20, 2008
LONDON: Commodity prices struck new record highs this week, led by oil which surged above $116 for the first time, as investors favoured raw materials, including metals, over a tumbling US dollar.
The weak US unit stimulates demand for dollar-priced commodities because they become cheaper for foreign buyers holding stronger currencies.
Oil: Prices soared to record levels once more, drawing strength from the struggling dollar and sliding energy stockpiles in key consumer the United States. Unrest in Nigeria, Africa’s biggest producer of crude, also lent support.
On Friday, the price of New York’s light sweet crude hit an all-time peak of $116.10 per barrel, while London’s Brent oil scored a lifetime pinnacle of $113.57. Crude oil prices crossed $116 a barrel for the first time after a pipeline attack in Nigeria. The most prominent militant group in Nigeria’s southern oil-producing region said Friday it had sabotaged a major oil supply pipeline belonging to Anglo-Dutch oil group Shell.
The Movement for the Emancipation of the Niger Delta (MEND) said in a statement that it had carried out the sabotage operation late on Thursday in Rivers state. Crude futures had meanwhile crossed $115 a barrel for the first time earlier in the weak as investors reacted to events in foreign exchange trading. “The weakening in the dollar against a basket of major currencies has created opportunities for investors to seek better returns in commodities,” said analysts at energy consultancy John Hall Associates.
“As such, further weakening of the greenback is likely to mean further increases in oil prices. It remains to be seen though when the dollar might break through the 1.60 dollar/euro mark,” they added. In the foreign exchange market, the European single currency had struck a record-high of $1.5984 on Thursday.
Precious metals: Gold prices began the week strongly, boosted by the weak dollar. But they ended lower on profit-taking.
“Further weakness in the dollar is likely to prompt additional safe haven buying, and in turn add upward pressure to gold prices,” said analysts at Barclays Capital.
Gold had struck an all-time peak of $1,032.70 an ounce on March 17, four days after the yellow metal breached $1,000 for the first time. On the London Bullion Market, gold dropped to $908.75 per ounce at Friday’s late fixing from $927.75 a week earlier.
Silver climbed to $18.18 per ounce from $17.95. On the London Platinum and Palladium Market, platinum rose to $2,026 per ounce at the late fixing on Friday from $2,019 a week earlier. Palladium decreased to $451 per ounce from $469.
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