Sun, Aug 10, 2014 - Page 15 News List

Widespread unrest lends support to oil and gold prices


Oil and gold prices won some support this week from Western sanctions imposed on Russia and the crises gripping Iraq and Gaza, traders said.

US jets struck jihadist positions in northern Iraq on Friday, a potential turning point in a two-month crisis Washington said was threatening to lead to genocide and to expose US assets.

Over in Moscow this week, Russia retaliated against tough new Western sanctions, banning most food imports from the US and the EU, and threatening to block flights over its airspace.

Elsewhere, deadly hostilities engulfed Gaza once again as a 10-year-old boy was killed on Friday and Israeli warplanes struck targets in retaliation for dozens of Palestinian cross-border rocket attacks.

OIL: Crude oil prices rose slightly over the week as geopolitical strains helped offset an ample supply situation, traders said.

Prices rebounded from multimonth lows as the US launched air strikes on Iraq, triggering fresh worries over supply disruptions. Markets recovered at the end of a week during which crude futures have been pressured by a firmer US dollar and solid supplies, traders said.

New York-traded prices hit a six-month low point at US$96.55 a barrel on Thursday. On Tuesday, Brent North Sea crude reached US$104.07 — the lowest level for four months.

CMC Markets analyst Desmond Chua said the developments in Iraq could add “significant risk premium to oil prices” as dealers worry about potential supply disruptions.

Singapore-based group Phillip Futures said fears about immediate disruptions “may be overplayed” as air strikes should target only northern Iraq, where oil fields are “relatively small and account for a small percentage of total output.”

By Friday on London’s Intercontinental Exchange, Brent North Sea crude for delivery in September edged up to US$104.89 a barrel from US$104.85 one week earlier.

On the New York Mercantile Exchange, West Texas Intermediate or light sweet crude for September stood at US$97.42 a barrel compared with US$97.30 for the August contract a week earlier.

PRECIOUS METALS: Gold prices won support as traders seeking cover moved to buy up the safe-haven investment.

“The numerous sources of geopolitical crisis should continue to lend support to gold, at least in the short run,” Commerzbank analysts said in a note to clients.

Gold futures hit a three-week high at US$1,322.92 an ounce on Friday. Silver also rebounded from a seven-week low on Wednesday, although not by enough to finish higher over the week.

By Friday on the London Bullion Market, the price of gold rose to US$1,309.75 an ounce from US$1,291.25 a week earlier.

Silver fell to US$20.13 an ounce from US$20.34.

On the London Platinum and Palladium Market, platinum climbed to US$1,475 an ounce from US$1,462.

Palladium dropped to US$857 an ounce from US$871.

BASE METALS: Prices came under pressure from a firmer US dollar, despite a euro fightback on Friday.

“Metal prices are under pressure across the board,” Commerzbank analysts said..

By Friday on the London Metal Exchange, copper for delivery in three months fell to US$6,982 a tonne from US$7,103 a week earlier.

Three-month aluminum increased to US$2,021.25 a tonne from US$1,987, and three-month lead grew to US$2,237.50 a tonne from US$2,223.

Three-month tin slid to US$22,367 a tonne from US$22,480 and three-month zinc dropped to US$2,295 a tonne from US$2,353.50, while three-month nickel gained to US$18,584 a tonne from US$18,500.

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