Richard, I think that markets are really forecasting inflation in moving Gold up down the road, not necessarily Dollar falling as a reserve currency.. Look at commodities....
CHICAGO (Reuters) - Wheat prices staged the strongest rally in months Friday after reports of frost damage to the crop in Australia, a leading export competitor of the United States.
In other commodity markets, gold prices edged higher on investor jitters about the world economy. Oil prices also rose on talk that Mexico may decide to continue to cooperate with other oil producers to restrain exports.
At the Chicago Board of Trade, wheat for December delivery closed 7 cents a bushel higher at $2.76.
A spokeswoman for the Western Australian Farmers Federation said Friday that frost destroyed major amounts of grain in Western Australia. She said frost last weekend hurt between 500,000 and two million metric tons, mostly wheat.
''I think it did have an impact. Our weather guy said they may have lost one-half to one million tons,'' said FIMAT Futures grain analyst Dan Cekander.
Wheat prices dropped to 21-year lows last month under pressure from the outlook for record world production and poor demand from top importers in Asia and elsewhere due to weak economies and currencies.
Since then, a weaker dollar has helped spark a pickup in wheat demand. So any crop failures in exporters like Australia, Canada or the European Union will support prices.
Rains in dry areas of the U.S. Plains improved winter wheat prospects this week, but rains have also slowed harvesting in the Midwest, supporting corn and soybean prices.
December corn closed 1-3/4 cents a bushel higher at $2.06-1/2 and November soybeans 1/2 cent higher at $5.15-3/4.
Farmers are well ahead of average in getting corn and soybeans out of the fields this year but have mainly been selling soybeans to raise cash. Harvest slowdowns tend to support prices on a lack of ''hedge'' sales of futures by country elevators and merchants who have bought grain and soybeans.
''We're not seeing as much hedge pressure because of the rains,'' said Mark Weidner, an oilseed analyst with Cargill Investor Services.
Gold prices ended at a four-month high on investor jitters about the world economy and stock markets. But the gain was only marginal due to an end-of-week bounce in the dollar and Wall Street stocks, analysts said.
Gold for December delivery at the COMEX in New York closed 70 cents higher at $302.80 an ounce.
''Gold rose early in the day after more weakness overnight in world stock markets and a further slide in the U.S. dollar, but gold came off its highs late in the day as the Dow Jones Industrial Average staged a bounce,'' said COMEX floor trader Carlos Perez-Santalla.
The U.S. dollar and Wall Street stocks dipped further on Friday but rebounded by the close of trading and ahead of a key weekend meeting of the finance ministers of the Group of Seven leading industrial nations. Measures to stabilize the current shaky world economy are high on the agenda in those talks.
''Currency collapses, hedge fund failures and the threat of further declines in stock prices have raised investors' need for a true safe haven, and gold has historically been the safe haven of last resort,'' said Derek Van Eck, portfolio manager of the Van Eck Hard Assets Funds which manage more than $250 million in gold mutual funds.
A late surge of buying also pushed oil prices higher at the New York Mercantile Exchange.
November crude oil closed 21 cents higher at $15.64 a barrel, with November heating oil up 0.67 cent at 42.23 cents a gallon and November gasoline up 1.30 cents at 47.24 cents a gallon.
Although large supplies continue to weigh on world oil prices, traders said Mexico may come under pressure to extend its agreement to reduce exports beyond the end of 1998.
Mexico, a major producer outside the Organization of Petroleum Exporting Countries, hosted a meeting with OPEC exporters Saudi Arabia and Venezuela in Cancun, Mexico, Friday to discuss issues affecting the oil market.
18:38 10-02-98
10/2/98 6:39 PM |
