Metals, oil prices rally on stimulus hope
LONDON, Aug 25: Metals and oil prices rallied this week on hopes of fresh economic stimulus from commodities-hungry China and the United States to boost the global economy, as fears about the eurozone lingered.
Policy makers at the US Federal Reserve are leaning toward more stimulus action “fairly soon” unless economic data turns around, minutes from their August meeting revealed on Wednesday.
Any fresh stimulus would likely take the form of quantitative easing (QE) — where new cash is created by central banks and pumped into the economy.
OIL: New York crude on Thursday surged to $98.29 a barrel — the highest level for 3.5 months — as hopes of Chinese stimulus soared after manufacturing activity in the world’s largest energy consumer fell to a nine-month low in August.
Brent oil meanwhile shot above $116 before prices soon began to lose some of their strong gains as stimulus hopes faded a little and on “doubts about Europe’s ability to address its debt crisis”, according to Phillip Futures trading group.
Hopes for US stimulus, buoyed by minutes of the Fed’s last meeting that showed “many members” supporting a move soon, lessened after comments by a senior central bank official that the situation had changed since early August.
Crude futures meanwhile also won support this week from official US data showing a slight tightening of oil supplies in the world’s biggest economy.
This was counter-balanced by China’s manufacturing data.
Oil prices were also weighed down by renewed concerns over the eurozone caused by German opposition to a Greek call for more time to enact Athens’ spending cuts and reforms.
Losses were capped meanwhile by worries of possible tight supplies caused by tensions over Iran.
Israeli sabre-rattling about an imminent unilateral strike being prepared by the country against nuclear sites in major oil producer Iran has put markets on edge.
By late Friday on London’s Intercontinental Exchange, Brent North Sea crude for delivery in October rose to $114.79 a barrel from $114 a week earlier.
On the New York Mercantile Exchange, West Texas Intermediate (WTI) or light sweet crude for October stood at $96.83 a barrel compared with $95.21 for the expired September contract a week earlier.
PRECIOUS METALS: Gold prices led the complex higher, with the yellow metal hitting a four-month high at $1,674.95 an ounce on Thursday.
Platinum futures reached a near four-month high of $1,561.50 an ounce as the market assessed the fallout of the previous week’s deadly violence at a platinum mine in South Africa.
“Gold’s price was ignited when the US Fed released its meeting minutes,” said Austin Kiddle, an analyst at brokers Sharps Pixley.
“The gold price will continue to be impacted by expectations and the eventual realisations, or not, of a third round of QE from the Fed, or more monetary easing from China and Europe, which will fuel inflation.”
Gold is seen as a good hedge against inflation and also takes on a haven status in times of economic unrest.
Meanwhile “with so much focus on the aftermath of the deaths of the striking platinum mineworkers in South Africa late last week, it was no surprise to see further increases in the prices of platinum and (sister metal) palladium,” said broker Johnson Matthey.
South Africa on Friday revived mediation efforts in its platinum belt, aiming to contain labour discontent among mineworkers following the nation’s deadliest police action since apartheid.
Labour Minister Mildred Oliphant met with union representatives in Rustenburg, the main city in the mining area in the north of the country where 44 died last week in clashes at Lonmin’s Marikana mine between disgruntled staff and police.
By late Friday on the London Bullion Market, gold jumped to $1,667 an ounce from $1,614.75 a week earlier.
Silver surged to $30.37 an ounce from $28.20.
On the London Platinum and Palladium Market, platinum increased to $1,537 an ounce from $1,455.
Palladium climbed to $643 an ounce from $592.
BASE METALS: Prices rallied on stimulus hopes.
“The recent run up in prices has been fuelled by high hopes for quantitative easing, but countering that the economic data has generally remained negative, especially in China,” said William Adams, an analyst at data group Fast Markets.
By late Friday on the London Metal Exchange, copper for delivery in three months climbed to $7,660 a ton from $7,537 a week earlier.
Three-month aluminium grew to $1,918 a ton from $1,857.
Three-month lead gained to $1,967 a ton from $1,872.
Three-month tin rallied to $20,325 a ton from $18,460.
Three-month nickel advanced to $16,531 a ton from $15,467.
Three-month zinc increased to $1,882 a ton from $1,800.
SUGAR: Sugar futures hit the lowest level for two years in London, at $544.90 a ton, on expectations of ample Brazilian supplies.
Sugar broker Czarnikow said “accelerating Brazilian production has dampened spirits”.
By Friday on LIFFE, London’s futures exchange, the price of a ton of white sugar for delivery in October slid to $558.20 from $586.50 a week earlier.
In New York on NYBOT-ICE, the price of unrefined sugar for October dropped to 20.20 US cents a pound from 21.04 cents.
COCOA: Prices extended losses after recently striking 10-month highs on tight supply worries.
By Friday on LIFFE, cocoa for delivery in December dropped to ¤£1,580 a ton from ¤£1,625 a week earlier.
On the NYBOT-ICE, cocoa for December fell to $2,382 a ton from $2,418.
COFFEE: Coffee prices diverged.
By Friday on NYBOT-ICE, Arabica for delivery in December edged up 162.15 US cents a pound from 161.05 cents a week earlier.
On LIFFE, Robusta for November retreated to $2,030 a ton from $2,107.
RUBBER: Prices gained amid solid crude oil prices and measures agreed by rubber producers Malaysia, Indonesia and Thailand to curb
output and exports, traders said. Crude oil is used in the production of synthetic rubber.
By Friday, the Malaysian Rubber Board’s benchmark SMR20 climbed to 252.80 US cents a kilo from 248.65 cents the previous week.—AFP