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To: 4figureau who wrote (4230)	4/26/2003 10:33:28 AM
From: 4figureau	Respond to of 5423

SARS hysteria not infecting gold, despite jitters Fri April 25, 2003 04:17 PM ET By Alden Bentley >>However, India is a much bigger factor in demand for gold, and has reported only four cases of SARS and no deaths. "If SARS goes to India, then gold will have a problem," said a New York trader. According to statistics by research firm Gold Fields Mineral Services, the 708 tonnes of bullion India bought for jewelry fabrication and other purposes in 2001 dwarfed China's 176 tonnes and Hong Kong's 46 tonnes. Excluding China, East Asian demand for gold was 641 tonnes in 2001.<< NEW YORK, April 25 (Reuters) - Gold was immune this week to worries about the deadly SARS virus, with investors thinking less about apocalypse scenarios and safe havens after none of the scariest war outcomes in Iraq came to pass. Early this week gold did move to its highest price since early April. But market players said SARS, Severe Acute Respiratory Syndrome, was hardly a factor even as anxiety mounts in other commodity markets that the spreading epidemic could undermine a fragile global economy. On Friday at the COMEX division of the New York Mercantile Exchange, June gold fell $1.40 at $333.70 an ounce, even as SARS dominated the headlines in China after Beijing admitted this week that it had mishandled the disease and that there were many more cases than it first reported. The flu-like virus has killed more than 200 people in China and Hong Kong and infected almost 5,000 worldwide. But this is a minuscule proportion of the global population and gold dealers said the hysteria over SARS was way out of proportion to the real risk of catching the disease. "If there is an influence, it's a supportive influence in that it adds fear," said Leonard Kaplan, president of Prospector Asset Management. "It can't be very much, it's an extraordinarily small factor." "How many people have died of SARS?" Kaplan asked, adding for perspective that something like 50,000 people a year die in car accidents in the United States. CHINESE DEMAND FOR COMMODITIES AT RISK The World Bank on Thursday downgraded its 2003 economic growth forecast for East Asia to 5 percent from 5.5 percent because of SARS, the Iraq war and other external shocks. But the bank said the adverse effects of the deadly SARS virus should be relatively short. Base metals and farm commodities markets have started to factor in the possible impact of SARS on economic growth in China, the largest market for many raw materials. Panic has been spreading in China and the government sacked two key officials over the crisis. Schools have been closed and hospitals quarantined as China tries to control the disease. The World Health Organization this week recommended travelers stay away from parts of China as well as Toronto, which has the largest number of cases outside of Asia. China has been buying a rising tide of raw material imports like metals for construction, cotton for textile manufacturing, and grains and meats and other foodstuffs for better diets. China now buys about $1 billion worth of U.S. soybeans each year to make cooking oils and feed for its growing livestock herds. If the spread of SARS continues unabated for another few months, U.S. exports of soybeans to be harvested this fall may face depressed demand from China and Asia. Investment bank J.P. Morgan warned this week that the spread of SARS threatens Asian demand for metals. According to Morgan China consumes 25 percent of the world's seaborne iron ore, 22 percent of the world's steel, 17 percent of its zinc and copper, 15 percent of its aluminum and 8 percent of its gold. However, India is a much bigger factor in demand for gold, and has reported only four cases of SARS and no deaths. "If SARS goes to India, then gold will have a problem," said a New York trader. According to statistics by research firm Gold Fields Mineral Services, the 708 tonnes of bullion India bought for jewelry fabrication and other purposes in 2001 dwarfed China's 176 tonnes and Hong Kong's 46 tonnes. Excluding China, East Asian demand for gold was 641 tonnes in 2001. GOLD A SAFE-HAVEN COMMODITY This year gold was mostly influenced by capital preservation strategies as investors sought hard assets as the United States and Britain prepared to launch a war in Iraq, which began on March 19. In February gold prices rose to their highest level in more than six years above $390 an ounce on market anxiety about what could go wrong once in a war to rid Iraq of its weapons of mass destruction and topple its brutal dictatorship. But the fighting was over in three weeks with no use of chemical or biological weapons against coalition forces or Israel and no more need to hold gold as risk insurance. As the SARS story unfolded gold remained closer to its 2003 lows in early April at below $320 an ounce, than its highs. Other precious metals may be more affected by any slowdown in China's economy. China is the most important buyer of platinum for jewelry, with sales to Chinese manufacturers rising 200,000 ounces in 2001 to 1.3 million ounces, according to refiners Johnson Matthey. "If any of these markets are going to get hurt, you could argue that platinum may weaken as the spread of SARS changes people's spending habits (in China)," the dealer said.