Commodity investors were feeling nervous about possible supply disruptions from Iran and Nigeria even before Osama bin Laden’s latest warning of new attacks against the US provided another reason to bid oil and gold prices higher on Friday.
Gold spiked to another 25-year high of $567.60 a troy ounce on Friday, a fresh 25-year high, after a fresh round of hedge fund buying as trading in New York opened.
Gold endured a volatile week with prices swinging through a near $38 range. Bullion dropped sharply on Wednesday in response to the falls in the Japanese stock market but rebounded as geopolitical fears mounted. Momentum traders found encouragement from the recovery but dealers warned extreme volatility was a danger signal.
“We’re being driven by fear and greed,” said one dealer: “You’d be brave to pick where the market is going from here.”
Gold closed at $559.20/560.00 in London, about 0.3 per cent up on the day.
US crude oil prices smashed through $68 to reach a four-month high as tensions over Iran escalated and more violence was threatened against foreign workers in Nigeria.
Nymex February West Texas Intermediate (expiring on Friday) rose $1.02 to $67.85 a barrel while the March contract hit $68.45 before easing back to trade $1.06 higher at $68.25. IPE March Brent added $1.08 at $66.31.
Nymex February gasoline rose 3.2 cents to $1,8080 a gallon while heating oil added 6.6 cents at $1.8630 with the products market expected to remain tight as refiners start to increase maintenance work.
Sugar futures surged to a new 25-year high in New York, reaching $17.21 a pound before easing back to trade 78 points higher at $16.87. The sugar market is expected to remain tight after a poor end to the harvest in Brazil while demand is expected to strengthen due to higher substitution of ethanol for fuel.
Platinum hit a record high of $1,050 a troy ounce this week and traded just below that level at $1,048 on Friday, helped by comments from Implats which said higher demand for autocatalysts would offset weakness in jewellery demand.
Copper and zinc also hit record highs this week but dealers reported mild profit taking and relatively little buying interest on Friday. Three-month copper retreated 1 per cent to $4552.5 a tonne. Zinc prices continue to be bolstered by low inventory levels, while labour disputes in South America have contributed to supply concerns. Three-month zinc traded 0.5 per cent firmer at $2,150 a tonne.
Aluminium retreated below the $2,400 level, falling 1.3 per cent to $2,377.5 a tonne. The Chinese producer Antaike forecast a 13 per cent increase in China’s aluminium output this year while consumption is expected to rise 16.5 per cent, with the auto industry expected to make a strong contribution to demand growth.
Nickel fell 0.9 per cent to $14,662.5 a tonne while lead was 0.8 per cent firmer at $1,267.5 a tonne.