Gold Soars; Cocoa at 27-Year Low
Friday, 4 February 2000
(AP)
GOLD INVESTORS went on a buying spree Friday, sending prices roaring up
8 percent after new evidence of the U.S. economy's sizzle and producer
optimism suggested strengthening demand for the metal as an inflation
hedge.
It was gold's biggest one-day rise in more than four months. Silver
followed its lead on the Comex division of the New York Mercantile
Exchange, jumping 5 percent.
In other commodity markets, cocoa sank to a 27-year low and soybean
and grain prices reversed an early slide to finish with solid gains.
Gold prices rallied strongly after the government said U.S. unemployment
had sunk to a 30-year low of 4 percent last month, heightening concerns
that inflation could rise. Also, the decline in bond prices helped support
gold's rise.
Then the market went sky-high when the world's No. 5 gold producer,
Placer Dome, announced it would suspend its hedging activities and cut
back gold hedges this year by 2 million ounces. The Canadian producer
said other producers were certain to follow.
The moves essentially signaled that big producers were bullish on gold, and
they sent speculators into a frenzy, pushing prices back to last fall's levels.
Gold for April delivery rose $22.60, settling at $312.50 an ounce, after
reaching its highest level in three months at $318.50.
It hasn't taken a bigger leap since last Sept. 28, when it snapped out of the
doldrums after sinking to a 20-year low of $255 last summer. That fever,
which began when European banks moved to limit their gold sales,
touched off a frantic two weeks in which gold spiked 34 percent to a high
of $339 on Oct. 5.
Analysts said the market may be eyeing that lofty high again after Friday's
stunning gain, particularly with rumors flying about hedge funds in trouble.
"If the emotions that we are playing on right now continue ... we can
obviously see a significant rise further in the price of gold," said Dave
Meger, senior metals analyst for Alaron Trading Corp. in Chicago.
Dan Vaught of A.G. Edwards & Sons agreed. "The first suspicions is that
you will get some followthrough here," he said.
Silver for April delivery, moving in sympathy with gold, was 28.7 cents
higher at $5.547 a troy ounce.
Cocoa plummeted on New York's Coffee, Sugar & Cocoa Exchange as
the crop arriving at West African ports for export continues to be heavy.
Cocoa prices, almost in free fall with supply growing and demand
shrinking, aren't expected to turn around until later in February when the
activity on docks in Ivory Coast and Ghana begins subsiding.
March cocoa slid to $751 a ton before recovering to $765, down $9 for
the day.
Soybeans surged in a late rally on the Chicago Board of Trade after falling
to a two-week low on continuing rains in once-dry growing regions of
South America.
Wheat also rebounded in technically inspired buying after prices declined
early on suggestions Pakistan might postpone any wheat tenders for
several months. Corn found support from the rally in other farm
commodities as well as from forecasts calling for a dry weekend in key
crop areas of South America.
Wheat for March delivery rose 3 1/4 cents to $2.57 a bushel; March corn
rose 1 3/4 cent to $2.19 3/4 a bushel; March oats rose 1/2 cent to $1.10
1/2 a bushel; March soybeans rose 4 1/2 cents to $5.05 1/2 a bushel. |
