Rate cuts fail to halt fall in commodity prices - LONDON
LONDON: A coordinated round of rate cuts by leading central banks failed to halt the downward march of prices yesterday for oil, copper and many other commodities, hit hard by the turmoil in financial markets.
Gold was an exception, getting a lift as investors scurried for the relative safety of the precious metal.
‘The only commodity that looks like it could be well supported in this environment, as a safe- haven investment, will be gold,’ said Mr Mark Pervan, ANZ’s senior commodity analyst. ‘Oil particularly is vulnerable because it is the commodity most exposed to the US economy.’
Crude oil rallied briefly after the coordinated rate cuts but was soon back in negative territory, slipping about US$1.60 a barrel to US$88.46 a barrel.
It had earlier fallen to as low as US$86.05 a barrel and is about 40 per cent off a peak of US$147.27 struck in July. Fears that the crisis could slash demand generated the widespread losses in commodity and energy markets.
Copper on the London Metal Exchange (LME) - often seen as a key gauge of real economic activity - trimmed losses following the rate cuts, after sliding more than 7 per cent earlier. LME copper fell 7.1 per cent to its lowest level since March 2006 at US$5,227 a tonne in early trade.
Gold rose sharply as investors sought safer assets but saw gains trimmed after the rate cuts.
It rose early to a peak of US$915.30 an ounce, its highest since Sept 29, but fell back to around US$900 after the rate cuts. Still, it is up sharply from its close of US$886.60 in New York on Tuesday.
In the agricultural sector, wheat and corn futures were swept lower on fears that the crisis could curtail demand.
Chicago Board of Trade wheat for December delivery fell nearly 2 per cent to US$5.93 a bushel, while December corn dipped 1.2 per cent to US$4.12 a bushel.
Robusta coffee futures in London tumbled 12 per cent in early trade to the lowest level since May last year before the benchmark January contract cut losses almost in half to stand US$105, or 5.6 per cent, lower at US$1,759 a tonne.
‘It’s fund selling, origin selling - more of what we have been seeing,’ one trader said, referring to long liquidation due to the global financial crisis.
Sugar and cocoa prices also fell sharply.
REUTERS
Source : Straits Times - 09 Oct 2008
Singapore Property - Buy, Sell, Rent, Invest
Mindy Yong
(+65)91002985
mindy@mindyyong.com ( email me )
Bargain hunting starts in tepid property market »« Unexpected fall in new US jobless claims - WASHINGTON
