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Gold's Glitter Attracts Investors
By Chris Flood
Financial Times
Monday, February 16, 2009
Commodity markets consolidated on Monday with gold edging higher, continuing to benefit from strong investor demand.
Oil prices steadied and base metals weakened as concerns about the outlook for the global economy were underlined by a sharp fall in Japanese gross domestic product, down 3.3 per cent in the fourth quarter of last year, a steeper-than-expected decline.
Gold was fractionally stronger at $942 a troy ounce, trading in a narrow range between a low of $937.45 and a high of $943.55, after ending trading in New York at $941.10 on Friday.
Hedge fund investors have extended their bets on gold prices rising with the latest data from the Commodities Futures Trading Commission showing that the speculative net long position rose 8,000 lots to 163,622 lots in the week to February 10, the the highest level for six months.
"The unusual amount of investment demand seen over the past six months has lifted the gold price to perhaps $200 an ounce, or about 25 per cent, above the level that we believe gold would be balanced by 'normal' supply and demand fundamentals of jewellery demand and lower scrap supply, hardly a bubble type valuation," said John Reade, precious metals analyst at UBS.
Oil prices steadied amid ongoing concerns about the outlook for consumption. last week, the International Energy Agency forecast global oil demand would fall by 1m barrels a day this year.
ICE April Brent fell 17 cents to $44.64 a barrel while Nymex March West Texas Intermediate dipped 3 cents to $37.48 a barrel.
Among the base metals, copper fell 3 per cent to $3,343 a tonne while aluminium slipped 1.2 per cent to $1,366.5 a tonne as the slump in output in Japan's electronics and carmaking sectors underlined concerns about the outlook for metals demand.
SOURCE: http://www.ft.com/cms/s/0/d0c7d41a-fc1a-11dd-aed8-000077b07658.html
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