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Gold hit 7-1/2 year highs for the second session in a row in Europe on Tuesday as buyers
from investment funds profited from a strong euro against the dollar, the main currency for gold.
News that producer Barrick Gold Corp would reduce its forward sales to zero over time gave
added support.
Barrick chief executive Greg Wilkins told Reuters the firm would no longer sell its gold
forward at set prices, announcing a change in its long-established policy.
"This represents one of the medium-term shocks I've been highlighting that could happen in
the gold market and that is that we might see faster than expected producer de-hedging next year,"
said analyst John Reade of UBS Investment Bank.
The euro climbed to a record high against the dollar as sentiment on the U.S. currency remained
negative given geo-political worries and a huge U.S. current account deficit that continues to
overshadow strong U.S. economic data.
A weaker U.S. currency makes dollar-denominated gold less expensive for holders of other
currencies like the euro and the yen.
Gold closed on firm ground in Europe at $403.30 an ounce after hitting $405.55 earlier in
the day, a price last seen in late February 1996.
Analysts said the market was poised for further gains having successfully crossed $400.
In other precious metals, platinum moved up again to a fresh 23-year high at $777.00 an ounce,
ahead of a statement expected this week from Anglo American platinum on its production plans.
BASE METALS
The price of several base metals in London also climbed to multi-year highs on Tuesday, fuelled
by a positive supply/demand picture for copper, analysts and traders said.
Copper hit a fresh six-year high, peaking at $2,128 a tonne, while aluminium recorded a two-and-half-year
high, zinc the highest in two and quarter years and tin the highest level in more than three
years.
"Copper is leading the way. Tightness in December, production problems and falling stocks
all point higher," Standard Bank London analyst Robin Bhar told Reuters.
"If the Andina division of Codelco's goes out on strike it could send prices shooting up
very quickly. So I am not writing off fundamentals as a driving force behind the upwards move,"
he said
Aluminium ended $13 higher at $1,562 a tonne.
Bhar said news that China, the world's second largest aluminium consumer could become a net
importer sooner than many thought was positive for the market.
He added that he expected nickel to track copper's moves, while for lead, zinc and tin the
response would reflect moves by the red metal but be more muted.
Nickel closed higher at $12,550 from $12,510 a tonne, while tin gained $25 to end the day
at $5,620 a tonne.
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