Commodities make small gains in Asia on U.S. attacks
Commodities make small gains in Asia on U.S. attacks
Dow Jones, Singapore
Most commodities, weighed by a supply glut and weak demand, saw some gains early Monday in Asia, following United States- United Kingdom military attacks on Afghanistan late Sunday. Some fell on news of the attack.
Gold, base metals and rubber rose. Palm oil prices fell on concerns that consumption from India and Pakistan, among the world's largest buyers, will be crimped further.
Spot gold rose US$2.50 to $293.25/oz on the attack, but analysts are divided over the metal's direction in the medium term.
An analyst at a major Sydney bank expects gold to break through the $300/oz barrier within the next few days. Technical charts indicate the price move wasn't a spike, but a reflection of the upward trend in gold due to the protracted nature of hostilities, said the analyst.
"Gold is a sentiment-driven metal and sentiment has well and truly changed," said the Sydney bank analyst.
Gold was boosted Monday more by the dollar's weakness since Sept. 11, rather than by safe-haven buying, he added.
At 0550 GMT (0.50 p.m Jakarta time), spot gold was trading at $293.35/oz, compared with its New York close Friday at $290.75/oz.
Meanwhile, mining operations in Indonesia are unaffected thus far.
PT. Freeport, a unit of U.S.-based Freeport Mc-Moran Copper & Gold Inc. said there is no security threat and that it is business as usual at its copper mines in Irian Jaya, Indonesia.
Crude palm oil futures on the Malaysia Derivatives Exchange fell 2.5 percent midday tracking lower soy oil values in Chicago and on initial reaction to the U.S. attacks.
U.S. attacks could raise fresh fears of shipping problems for palm oil exporters, an MDEX trader said. Pakistan and northern Indian ports are near the war zone.
Early weakening of the Indonesian rupiah following U.S. attacks on Afghanistan was also bearish for palm oil, another MDEX trader says. Weaker rupiah makes Indonesian exports more competitive.
The MDEX December contract fell to 873 ringgit ($229.7) per metric ton down 22 ringgit from Friday's close at midday. Trading volume, however, was low at 433 lots as market awaits clearer leads. One lot is 25 tons.
Rubber futures prices on the Singapore Commodity Exchange closed higher midday Monday on short covering and a stronger U.S. dollar against the rupiah, following the U.S. attack, traders said. The Tokyo Commodity Exchange was closed Monday.
But the rebound is expected to be short-lived as the weaker rupiah is likely to weigh on TSR20 prices, said a Singapore-based trader.
November RSS1 on Sicom is up 0.25 at 96.75 Singapore cents/kilogram (54 U.S. cents); November RSS3 and TSR20 are also up 0.25 cents, at 53.25 U.S. cents/kg and 49.0 U.S. cents respectively.
Physical demand for rubber, meanwhile, is being monitored closely after the strike, said a trader in Singapore. It is too early to predict price direction and impact on demand, as the attack just started overnight.