AFP: Gold falls to $700 as oil rises by $2 a barrel
GOLD fell to its lowest level in over a year and oil rose more than $2 a barrel, ahead of today's emergency OPEC meeting which is expected to consider lowering production by up to two million barrels a day.
Oil has fallen steeply since peaking at $147 a barrel in July and by yesterday was down around 54pc from this peak. In New York a barrel of NYMEX crude changed hands at $69.41, or $2.66 higher on the day. London Brent crude rose by $2.05 to $66.57.
OPEC the source of more than a third of the world's oil supplies, meets in Vienna today and reports suggest that there is at least some support among members for a cut in supplies to support prices.
Iran suggested a two million barrels per day cut, although Saudi Arabia, OPEC's top member and the world's biggest oil producer, has said only that the oil price would be determined by the market.
The oil market had lost more than $5, or 7pc on Wednesday, falling to 16-month lows after data showing piling inventories of crude oil in the United States, the world's largest consumer of energy.
Short covering
"We may well be experiencing some short covering in front of tomorrow's meeting in Vienna," Robert Laughlin with MF Global said yesterday.
"We should hear more bullish rhetoric from oil ministers as they arrive in Vienna today.
"We've had some mixed signals so far but still nothing from Saudi who hold the key."
OPEC president, Chakib Khelil, said the oil-producers' organisation could consider cutting back its output in several steps.
"I think that is a solution not to be excluded," he told reporters.
Meanwhile, on the bullion markets there was what looked like a flight to cash as the price of gold fell below $700 an ounce for the first time in more than a year. Analysts said a rising dollar and stock-market losses have forced investors to sell the metal to raise cash. Silver also dropped.
Before yesterday, gold had fallen 12pc this year as the dollar gained 11pc against a weighted basket of six major currencies and the Dow Jones Industrial Average lost 36pc.
"The name of the game is to raise dollars," said Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago.
"People will sell their winners to fund their losers. The best performer since the financial crisis began has been gold," he added.
