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Oil rockets past 100 dollars, gold strikes historic high

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Jan 4, 2008
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LONDON, Jan 4, 2008 (AFP) - A weak dollar and political unrest sent oil surging past 100 dollars for the first time and gold futures to an historic high, smashing a 28-year record, during the first trading week of 2008.

Platinum also struck an all-time peak as the precious metals complex shone.

OIL: New York's light sweet crude reached a record high of 100.09 dollars per barrel on Thursday, before sliding below the symbolic level on profit-taking.

London's Brent crude hit an historic peak of 98.50 dollars.

"Oil prices remain well supported, with most analysts forecasting more record highs in the near future, beyond 100 dollars," Sucden analyst Andrey Kryuchenkov said.

"A favourable combination of declining inventories, the weak greenback (dollar), soaring demand from Asia and geopolitical risks helped to propel crude prices to 100 dollars per barrel," he added.

Crude futures, which hit 100 dollars for the first time on Wednesday, broke through the key psychological barrier Thursday after the US Department of Energy said US crude inventories had fallen by 4.0 million barrels last week.

It was the seventh week in a row that stockpiles had dropped.

Crude was also being supported by concerns about stability in Pakistan following last week's assassination of opposition leader Benazir Bhutto, as well as by cold weather, which was pushing up demand for heating fuel.

Oil prices were also boosted by the weakness of the US currency, which encourages demand for dollar-priced commodities because it makes them cheaper for buyers using stronger money.

On Friday, New York's main oil futures contract, light sweet crude for delivery in February, fell to 97.25 dollars from 97.61 dollars a week earlier.

Brent North Sea crude for February rose to 96.54 dollars from 95.68 dollars.

GOLD/SILVER: The price of gold hit an all-time peak of almost 869 dollars on Thursday as the precious metal benefited from its safe-haven status amid record high oil, a struggling dollar and Pakistan tensions, analysts said.

Gold reached an historic 868.89 dollars an ounce on the London Bullion Market.

"The main reason for the increase was that the oil prices have breached through the 100-dollar mark. This and a weakening dollar, has driven the gold prices higher," said Gary Yue, a dealer at Delta Asia Financial Group.

"Investors are worried about the oil prices and the weak dollar. When the situation is unstable, they invest their money elsewhere and this has boosted the buying interest in gold," he said.

The precious metal, also being supported by increased jewellery purchases in emerging economic powerhouses China and India, had first smashed its 28 year-old record of 850 dollars an ounce on Wednesday.

According to analysts, current price movements were being slightly exaggerated by the lightness of holiday trade, which meant large transactions could influence the market more than usual.

"With 850 dollars cleared, gold could quite easily find further upside momentum as the background picture of geopolitical tensions and unstable financial markets attracts safe-haven seeking investors," said James Moore of TheBullionDesk.com.

Political unrest in Pakistan has led to fresh interest in gold because the precious metal is regarded as a haven in troubled times.

Higher oil prices also encourage the buying of gold. The precious metal is seen as a defence against inflation, which is being driven in many countries by the surging cost of crude oil.

On the London Bullion Market, gold prices rallied to 855 dollars an ounce at Friday's late fixing from 833.75 dollars a week earlier.

Silver increased to 15.27 dollars an ounce from 14.75 dollars.

PLATINUM/PALLADIUM: The price of platinum reached a record high of 1,554 dollars an ounce.

"Platinum rallied strongly as a result of the weaker dollar as well as its own bullish (supply and demand) fundamentals," said Moore.

On the London Platinum and Palladium Market, platinum advanced to 1,545 dollars an ounce at the late fixing Friday from 1,530 dollars a week earlier.

Palladium climbed to 372 dollars an ounce, from 355 dollars.

BASE METALS: Base metals price began the New Year strongly.

"In thin trading the main factors that markets are latching on to are strength in other commodity markets and a weaker dollar," Barclays Capital analysts noted.

On Friday, the price of copper for delivery in three months jumped to 6,930 dollars a tonne on the London Metal Exchange from 6,780 dollars a week earlier.

Three-month aluminium prices gained to 2,484 dollars a tonne from 2,430 dollars.

Three-month nickel rose to 28,500 dollars a tonne from 26,800 dollars.

Three-month lead spiked to 2,624 dollars a tonne from 2,560 dollars.

Three-month zinc climbed to 2,510 dollars a tonne from 2,410 dollars.

Three-month tin increased to 16,580 dollars a tonne from 16,450 dollars.

COCOA: Cocoa prices rebounded amid a fragile peace process in leading producer Ivory Coast.

By Friday on the LIFFE, London's futures exchange, the price of cocoa for March delivery rallied to 1,076 pounds a tonne from 1,050 pounds a week earlier.

On the New York Board of Trade (NYBOT), the March cocoa contract increased to 2,101 dollars a tonne from 2,059 dollars.

COFFEE: Coffee prices advanced in London and New York.

By Friday on the LIFFE, Robusta quality for March delivery rose to 1,945 dollars a tonne from 1,892 dollars a week earlier.

On the NYBOT, Arabica for March delivery climbed to 133.30 US cents a pound from 132.75 cents.

SUGAR: Sugar futures rose, helped by record-breaking oil prices.

Sugar cane is used to produce ethanol, a cheaper biofuel alternative to motor fuel.

By Friday on the LIFFE, the price per tonne of white sugar for March delivery firmed to 326 pounds from 317.90 pounds a week earlier.

On the NYBOT, the price of unrefined sugar for March delivery gained to 11.30 US cents a pound from 11.04 cents.

GRAINS AND SOYA: Grains and soya made sharp gains in Chicago to stand close to historic highs.

AG Edwards analyst Bill Nelson said it had been an "outstanding beginning of the year" for markets, adding that the weak dollar and strong energy prices were supporting prices.

Grains and soya are used to make biofuels.

By Friday on the Chicago Board of Trade, the price of maize for March delivery gained to 4.64 dollars a bushel from 4.52 dollars a week earlier.

Wheat for March delivery jumped to 9.19 dollars a bushel from 8.85 dollars.

January-dated soyabean meal -- used in animal feed -- surged to 12.55 dollars from 12.23 dollars.

On the LIFFE, the price per tonne of wheat for May delivery rose to 183 pounds from 175 pounds a week earlier.

RUBBER: Rubber prices rose on tight supplies caused by wet weather from the recent monsoon season in Asia.

On Friday, the Malaysian Rubber Board's benchmark SMR20 rose to 257.70 US cents per kilogramme from 252.45 US cents a week earlier.

burs/bcp/adpby Delphine Dechaux and Ben Perry

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