COMMODITIES prices across the board climbed higher yesterday, after last week’s sturdy gains, on a weaker dollar and hopes of economic recovery, prompting analysts to revisit their medium-term gold and base metals forecasts.
“However, a deluge of economic data is expected from the US this week and has the potential to dampen the ‘green-shoots’ sentiment, or at least serve as a reminder of the hard work still to come,” James Moore said in the morning London Bullion Report yesterday. His warning was underscored by a late easing in gold to 976/oz in New York from 990/oz earlier in the day.
The dollar dropped below 1,41/à last week for the first time this year, after weakening 6% against the euro last month on fear that the US government would need to raise more debt to fund rescue and stimulus packages.
Three-month copper touched 5014/ton in London, its highest since October, as new data showed Chinese manufacturing expanded last month for the third month running.
According to McCloskey figures reported by Bloomberg, coal shipped from Richards Bay rose for a second week to 59,20/ton last week. Crude oil touched its highest since November at 68/barrel, having gained 30% last month.
Platinum rose to a six-week high of 1220/oz while gold reached a three-month high of 990/oz in Asia, ascribed to its attraction as a hedge against burgeoning inflation rather than as a safe-haven investment, which characterised buying late last year.
World Federation of Diamond Bourses president Avi Paz said last week that diamond prices and sales appeared to be stabilising slowly.
Resources shares followed the trend, with Anglo American 8,8% better at R249,50 and Billiton 6,5% firmer at R205.
Standard & Poor’s credit analyst Alex Herbert yesterday raised his base metals price predictions for this year and the longer term for copper, gold and nickel compared with the last forecasts made in December, but downgraded the outlook for aluminium because demand remained depressed.
In the immediate future, base metals prices would remain weak as the automotive and construction markets remained depressed and inventories of some commodities were still high, he said.
Standard & Poor’s forecast that gold would average 850/oz this year and 600/oz beyond 2011. Copper would average 3860/ton this year to 2011 and nickel 11025/ton. But aluminium was expected to average only 1433/ton this year, rising to 1654-1874/ton in 2010 and 2011.
Local investment house Imara SP Reid recommended a number of gold companies in its latest Stocks & Strategy monthly newsletter.
Although it said it maintained its preference for Gold Fields among the three major producers in SA, it also recommended AngloGold as a “buy” (for bullion believers) and Harmony as an “add”. Among smaller gold companies, it also suggested buying Pan African Resources and Great Basin Gold .
