Gold, oil surge on unrest

Photo: Reuters

Gold rises to all-time record of $1432 while sliver hits fresh 31-year high

Published: 2011/03/02 06:33:47 AM

GOLD rose more than 1% to an all-time high above $1432 yesterday as escalating violence in Libya and unrest spreading across the Middle East outweighed optimism over stronger US economic data, while silver hit fresh 31-year peaks.


In SA, the rand climbed for a fifth day against the dollar as gold extended its best monthly gain since April and a report showed manufacturing sentiment had improved. Brent crude oil futures rose above $112 a barrel as the unrest in the Middle East and North Africa threatened to cut crude supplies.


The rand rose 0,2% to R6,95/$. Against the euro, it weakened 0,1% to R9,6071, snapping three days of gains.




Gold climbed as much as 0,8% to $1423,30/oz, extending last month’s 5,9% rally, as violence in Libya and other Middle Eastern states prompts investor demand for precious metals.




SA’s purchasing managers index rose to a 10-month high in February, spurred by a decline in the jobless rate and tempered by rising input costs for manufacturers, Kagiso Securities said.




"Commodity and emerging-market assets have continued to enjoy strong support. Further rand gains are indeed possible," Tradition Analytics said.




Metals, crops and fuel beat stocks, bonds and the dollar for a third successive month, the longest stretch since June 2008, as inflation lifted cotton and cocoa and investors speculated violence in the Middle East and northern Africa will restrain energy supplies.


Bullion, along with platinum, accounts for about a fifth of SA’s export revenue.


With more than 2,5-trillion in mineral reserves, SA is the richest country in terms of "commodity wealth", followed by Russia and Australia, according to Citigroup.








Platinum has jumped as much as 1,3% to 1831,75 an ounce, the highest in a week.


The gold price has risen nearly 8% since uprisings in Tunisia and Egypt unleashed a swathe of popular protests across the region, sending the oil price to two-and-a-half-year -year highs and raising concern among investors about the effect of soaring energy prices on growth.




"We were looking for a correction in gold in January, and that correction was interrupted by the political situation in North Africa and the Middle East, and that has been responsible for getting gold back up to 1400," said Deutsche Bank analyst Daniel Brebner.


Meanwhile, US Federal Reserve chairman Ben Bernanke offered a fairly upbeat assessment of the US economy yesterday, saying the surge in oil prices as a result of the Arab uprisings was unlikely to have a major effect on growth or inflation as long as higher prices did not become sustained. Reuters