COMMODITIES-Base metals, gold extend losses in Asia
Global base metal and gold markets extended their losses on Thursday as big investment funds continued to shy away from the once roaring bull markets as concern mounts about rising interest rates and metal supplies.
Analysts said interest rates hikes in the United States and other countries could choke growth and any drop off in metal demand would cap chances of an early recovery in prices.
“We have possibly seen the all-time high and it might take some time to get back to the same levels again,” said David Thurtell, an analyst with the Commonwealth Bank of Australia.
Analyst Peter Richardson of Deutsche Bank in Melbourne said investors are worried that tightening monetary conditions could hurt metal demand. “It’s an adjustment to risks posed by policy changes and demand for commodities in the medium term could be impacted.”
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Soaring commodities prices lifted mining stocks such as BHP Billiton (BHP.AX: Quote, Profile, Research), pushing Australia's main index to a record on Friday, and most other Asian share markets rose on gains in technology stocks.
Gold matched a 25-year-high above $588 an ounce and platinum hit a record high as fund managers poured money into precious metals, while copper and zinc stayed close to new peaks reached on Thursday.
"Fund operators are shifting back into metals ahead of the new quarter," said Koji Suzuki, market analyst at Livedoor Commodity Ltd. in Japan.
Metals in demand as Asia returns to buy
Leading base metals were bouyant on Monday as Asian traders returned after a week-long holiday for Chinese New Year, maintaining the investment-led commodity market boom and keeping prices near record highs.
Shanghai copper and aluminium futures jumped by their daily limits to new record highs.
"Over the Lunar New Year period the LME (copper) rose above $5,000, so from the Chinese point of view they had to close the gap and so Shanghai copper rose," said Wang Zheng, a metals analyst at Shanghai Dalu Futures.
Last week an influx of fresh investment fund money at the
Buying into metals to tap growth in Asia
Joe Joseph, manager of the $1.5 billion Putnam International Capital Opportunities Fund, used the global drop in the equity markets since April to buy shares of metals companies that will benefit from Asias growth.
Joseph bought more shares of Pacific Metals Co. and started buying a stake in Kagara Zinc Ltd. as investors fled commodities stocks on concern that central banks would slow economic growth by raising interest rates.
The Morgan Stanley Capital International World Index has fallen 6.3 percent since April. The Putnam funds biggest positions include Tokyo Steel Manufacturing Co. and Hyundai
Asia keeps gold above $550
Fund-buying coupled with physical buying in Asia has helped the spot price of gold rally and remain above $550 a troy ounce on Monday, traders said.
At 3.05pm, gold was $3/oz firmer at $555.35 a troy ounce after hitting an intra-day best level of $556.63/oz earlier.
If prices hold above the $550/oz level, gold could breach the next resistance level of $560/oz in the short term, London-based Barclays analyst Yingxi Yu wrote.
With market conditions remaining nervous after the price volatility over the past few weeks and also a lack of main factors to drive the
Ivanhoe to swap coal unit for stake in Asia Gold
Ivanhoe Mines Ltd. (IVN.TO: Quote, Profile, Research) will exchange its coal division in Mongolia with Asia Gold Corp. (ASG.V: Quote, Profile, Research) for a majority stake in the small explorer, Ivanhoe said on Wednesday.
Ivanhoe, currently with about a 47 percent stake in Asia Gold, will acquire 82.58 million common shares, which will boost its holding to 88.8 percent on a fully diluted basis.
As part of the transaction, Ivanhoe has agreed to extend an interim working line of credit to Asia Gold of up to $10 million. The deal is subject to
