Gold:
The International Monetary Fund has proposed the sale of 403.3 tonnes of gold to bolster its sagging coffers as part of a critical financial overhaul. The sale, amounting to some 12 per cent of its gold reserves, could yield around $11 billion.
The IMF would use the funds to help shore up IMF finances and create a new endowment with more diverse investments to generate income. The IMF faces a budget shortfall of some $140 million in the fiscal year 2008 that ends on April 30.
The sale would affect some 13 million ounces of the IMF’s 103.4 million ounces of gold reserves. The sale would likely take place over several years in an effort to avoid market disruption.
Still, the sale could have a dramatic impact on the market, where according to IMF officials some 500 tonnes are traded annually. Gold prices recently hit an all-time record above $1,000 an ounce.
An average price of about $850 an ounce would generate about $11 billion. Of that, some $6.6 billion would be used to create the endowment.
Gold prices slid on April 9, amid concerns over the plan by IMF to sell around 400 tonnes of gold. Investors have reacted to the news of the IMF’s planned sale. The sales are giving psychological pressure to the market.
The IMF is the world’s third-largest gold holder after the United States and Germany, with 3,217.3 tonnes in stock. It wants to sell 403.3 tonnes and use the profits to invest in government and corporate bonds, and possibly equities.
The benchmark February gold contract on the Tokyo Commodity Exchange stood at 3,021 yen per gram, down 25 yen or 0.8 per cent from April 8, close of 3,046 yen.
Tokyo traders said TOCOM gold was put under technical selling pressure as the yen firmed slightly against the dollar. Spot gold was expected to be supported as investment funds were looking to buy on dips, traders said.
Gold struck a record high of $1,030.80 an ounce on March 17 before falling in a broad commodities sell-off. It hit a two-month low of $872.90 last week.
Oil:
According to the US Energy Information Administration, oil prices will average more than $100 a barrel this year. It raised its 2008 forecast for West Texas Intermediate to $100.61 a barrel from the $94.11 projected a month ago.
The statistical arm of the US Department of Energy warned that the global oil market remained “fundamentally tight” in spite of a slowdown in US oil consumption and growing risks to global economic growth.
The EIA also predicted that US summer demand for petrol would fall for the first time since 1991, forecasting gasoline consumption would decline by 36,000 barrels a day or 0.4 per cent to 9.404 million barrel per day.
Oil prices slipped on April 8 day ahead of the latest US weekly inventories data.
Nymex May West Texas Intermediate fell $1.09 to 108.00 a barrel while ICE May Brent lost $1 at $106.14 a barrel.
US crude stocks were expected to have increased 2.2 million barrels last week, according to a preliminary poll of analysts by Reuters, helped by a rise in imports.
US refinery utilization remains low but a rise of 0.8 percentage points to 82.4 per cent is forecast. Following a sharp increase in crude imports in the previous week, some analysts think there could be a significant jump in refinery output as production of petrol is expected to increase.
Meanwhile, Opec President and the oil minister for Qatar said recently that world oil supply is enough and there is no need for Opec to boost output to lower near record prices. At its earlier meetings, Opec has declined calls from consumers, including the US to raise supply, saying the world had enough crude. The organization is of the view that factors including the weakness of the dollar, speculative trading and political tension in the world are lifting prices, not a lack of oil.
Rice:
Rice, the staple food for half the world gained 2.4 per cent to $21.50 per 100 pounds in Chicago, more than double the price a year ago. China, Egypt, Vietnam and India, representing more than a third of global rice shipments, curtailed sales this year to protect domestic stockpiles.
Rising food prices are fuelling global inflation. Wholesale costs in India rose 7 per cent in the week ended March 22, the fastest pace in more than three years, underscoring the threat from rising food costs, the ministry of commerce and industry in New Delhi said.
The Philippines is tightening controls over domestic sales and boosting overseas purchases to curb price rises and avoid the kind of unrest experienced by some African countries. Burkina Faso, Cameroon, Egypt, Indonesia, Ivory Coast, Mauritania, Mozambique and Senegal have also experienced unrest in recent weeks related to soaring food and fuel prices. Record wheat prices threaten social stability too.
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