A slump in the value of the US dollar saw gold prices settle at a new recent high of $1,006.40 in New York on Friday, rallying above the $US1,000-an-ounce mark for the third time in a week.
But oil and copper fell, despite the greenback’s weakness which would normally push commodity prices higher.
Gold for December delivery rose $US9.60 in trading on Friday and touched $US1,013 an ounce in trading.
That daily rise was also most of the week’s jump of a smidge under $10 an ounce, or 1%. The week before it had jumped 4%.
Most of the gains this week were driven by a weak US dollar, which has fallen out of favour amid fears that the huge stimulus spending will set the US too big a budget deficit and debt burden to be easily reduced.
The dollar index, which tracks the greenback against the euro, yen and four other currencies, hit a one-year low this week, hitting 76.511 on Friday.
The dollar fell against the yen for the fifth straight week and is at its lowest level against the euro since the end of last year.
The Aussie dollar ended at around 86.30 US cents, and that is cutting the Australian dollar price of gold.
Despite that, Australian investors still bid up gold shares such as Lihir and especially Newcrest.
The solid Chinese import figures were good news on the whole for commodity markets, although oil and iron ore volumes fell slightly.
But Chinese imports of copper concentrates fell 20% to be down a second successive month in August.
They were still up 83% from August 2008, which was a low month because of the Olympics.
The weak greenback is a major factor helping push gold and some other commodity prices higher, although the agriculturals sugar, wheat, corn, soybeans, coffee, etc, are being driven more by supply and demand factors at the moment.
The last time gold rose strongly above $US1,000 an ounce was in February of this year and before that was in March of last year when it hit a record high of $US1,030 as Bear Stearns was falling apart and then being rescued by JPMorgan.
But gold prices fell to $US720 an ounce last October after Lehman Brothers failed and global financial markets froze as banks and other institutions lost trust in everything bar the US dollar.
In contrast to the bullishness about gold, oil went right off the boil on Friday, despite the weakness of the greenback.
US crude futures prices fell nearly 4% to $US69.29, after hitting a high of $US72.90 in early trading.
For the week, the price of the October contract rose $US1.27 a barrel, or less than 2%.
London Brent crude settled down $US2.17 at $US67.69 a barrel.
The International Energy Agency said that oil demand would rise this year and next as the global economy recovers, although it also said oil stocks in the big developed countries of the OECD were up 4.6% in July from the same month of 2008.
Copper fell after an earlier rise on the back of the weaker dollar.
The fall in China’s August copper exports in August, after July’s fall, and a rise in stocks in Shanghai, saw that early strength reversed and the Comex metal fell 1% to $US2.8465 a pound in New York.
The metal fell 0.7% last week.
Grains were mixed after the US department of Agriculture’s latest update boosted estimates.
The US corn crop will be 1.5% larger than forecast a month ago, thanks to mild Midwest weather in July and August which improved prospects for record yields.
The USDA estimated that output will be 12.954 billion bushells, more than the 12.761 billion forecast last month and up 7% from 2008’s crop of 12.101 billion bushells.
That saw prices finish up 4.5 cents at $US3.19750 a bushell on the Chicago Board of Trade.
The weaker greenback offset the bearishness of the bigger harvest news.
The USDA said farmers will harvest 80 million acres of corn this year, up from 78.6 million in 2008.
That has helped push corn prices down 41% so far this year.
The good weather has also boosted output estimates for soybeans, with a record crop in prospect.
The USDA said 3.245 billion bushells of beans could be produced this year, up 1.4% on the August forecast and nearly 10% greater than the 2008 harvest.
Prices plunged as a result with traders warning the crop could get larger as the harvest expands.
November soybean on the Chicago Board of Trade plunged 23.5 cents, or 2.5%, to $US9.03 a bushell on Friday, down 2.1% over the week and 8% so far in 2009.
Sugar prices soared last week, then fell Friday after major importers cancelled tenders because of the high price.
Countries including Egypt cancelled plans to import sugar and prices fell by more than 15% from Tuesday’s 28 year high of 24.85 US cents a pound, to end at 22.86 cents in New York on Friday.
This year, prices have almost doubled as a lack of rain hurt crops in India, the world’s largest consumer and second biggest producer. Excess precipitation in Brazil, the top cane grower, slowed the harvest, straining supplies.
