Another six month high for gold in New York as oil prices hit $US60 a barrel and worries continued to mount about the health of some parts of the US mortgage industry and some of the participants.
And it’s not just gold which is reacting to the rising oil prices.
The prices of wheat, corn and sugar, raw materials for popular alternative fuels, are also becoming more volatile.
Oil rose above $US60 a barrel before settling a touch lower while the prices of some base metals, such as copper jumped as well. Gold prices roses just over three per cent last week in the US.
It’s the sort of finish the Australian market likes to hear when trading starts Mondays, but Wall Street was down because of the worries about the impact of higher oil prices on inflation and those fears about the mortgage market.
New York gold for April delivery rose $US9.50, to $US672.30 an ounce on Comex division of the New York Mercantile Exchange: that almost matched the $US673.90 reached earlier in the week. That was in turn the highest price since July 17 last year.
Oil touched $US 60.80 a barrel, the highest since early last month. Oil prices have risen 16 per cent in the past three weeks as freezing weather in most of the US sparked demand for heating fuel. There are more forecasts for cold, snowy weather this week in the US northeast.
Also helping dive oil higher was news claiming that Nigeria saying that it would comply with OPEC production cuts. It has said that in the past but failed to do so.
Crude oil for March delivery finished 18c higher at $US 59.89 a barrel.
Copper prices in London and New York finished with good gains. On the LME copper rose $US165 a tonne to $5,548 a tonne: in New York it rose 7c to $US2.52 a lb; lead was higher as was nickel. Zinc was a touch easier.
Agricultural commodities were also stronger with wheat and corn in the US finishing higher while sugar broke a long fall.
Sugar prices in New York had their best day since December on more speculation that the rising demand for ethanol will boost demand.
It seems ethanol and biodiesel demand is now linked in the markets to the fluctuations in oil prices (in the eyes of traders) and this is helping make corn, wheat, sugar and soybean prices far more volatile.
This is coming at a time when drought has cut wheat crops and corn plantings are lower than expected. However sugar harvests in Thailand, India and China look like being bullish.
Similar speculation has helped drive the prices of wheat and corn futures higher in the past month, especially since President Bush’s State of The Union Address late last moth in which he committed the US to cutting petrol consumption by 20 per cent by boosting the output of ethanol and biodiesel.
Sugar rose to 10.51 USc a lb in New York, up almost a quarter of a cent on the day.
The rise rally halted a six-week slide in prices. Sugar is 47 per cent down since reaching a 24-year high a year ago.
The ISO (International Sugar Organisation) says world output will exceed demand by as much as 7 million tonnes in the year to September 30, 2007, up from a November forecast of 5.8 million tonnes
In Australia that’s not good news for CSR.
