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Saturday February 12 2000

Gold's rise caps week of highs

By Paul Solman

Gold surged after several producers announced they were rethinking their hedging strategies.

Hedging, which involves borrowing bullion and selling it forward into the market, accounted for about 10 per cent of the 4,000 tonnes of gold supplied last year. Some believe it has been a significant drag on prices.

The move away from hedging was led by Placer Dome, which said it would cease the activity. AngloGold, the world's largest gold miner, also revealed it had been winding down its hedging since last year, while Western Areas said it had closed out its forward sales for the next two years.

The metal climbed towards $320 an ounce at one stage, its highest since October when European central banks declared a moratorium on gold sales.

However it was unable to sustain the gains amid disappointment at Barrick's decision, and fixed in London yesterday afternoon at $311.50 a troy ounce, up more than $18 on last Friday's level.

Palladium continued the remarkable run that has added more than $100 to its value in recent weeks. It hit an all-time high of $580 in London, amid lingering fears about Russian supplies, while similar concerns propelled sister-metal platinum to an 11-year high of $548.

Nickel rose to a five-year high of more than $9,600 on the London Metal Exchange, drawing support from growing demand in the stainless steel sector, and from an industrial dispute at Eramet's operations in New Caledonia, which forced the company to declare force majeure on its deliveries.

To complete a week of records, crude oil chalked up a post-Gulf war high of more than $28 a barrel yesterday in London. This was despite evidence from the International Energy Agency that Opec compliance to self-imposed output curbs fell to 76 per cent in January and growing speculation that next month's meeting might decide to relax the curbs.

Inventory data showed US stocks continued to fall and had reached their lowest in 24 years. Benchmark March Brent blend was $27.88 in late trading yesterday, while March New York light crude stood at $29.68.

-- Zdude (zdude777@hotmail.com), February 12, 2000