Oil, gold reach new record prices

The prices of oil and gold hit records as investors switched money into commodities to escape turmoil in other markets.

Izvor: BBC

Monday, 17.03.2008.

18:54

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The prices of oil and gold hit records as investors switched money into commodities to escape turmoil in other markets. U.S. light sweet crude hit USD 111.80 a barrel on Monday, before slipping to USD 107 in afternoon trade in New York. Oil, gold reach new record prices The spot price for gold also briefly hit a record above USD 1,030 an ounce. Commodity prices have been boosted by the falling dollar, which hit a record low against the euro and fell to a 12-year low against the yen. Oil prices have risen about 16 percent this year, gold is up 23 percent. Investing in oil and gold is seen as a way of protecting against the dollar's weakness. "The recent oil prices have been swayed by the currency moves, including this latest rally to a record," said Tony Nunan, risk management executive at Tokyo-based Mitsubishi. "The dollar weakness is the factor at the moment." he added. The dollar has been undermined by the credit crisis and the effect that is having on the U.S. economy. The near collapse of Bear Stearns last week raised fears that US banks were struggling to cope with the credit crisis. "Oil clearly led the way down," said David Holmes, director of metals sales at Dresdner Kleinwort Investment Bank. "The market is incredibly jittery because of the financial situation," he said. Looking ahead, analysts say the Fed could cut overnight rates by up to 125 basis points by the end of its meeting on Tuesday. "What is really important for this week is to see what the Fed is doing," said Michael Widmer, analyst at Lehman Brothers. In the long run, oil demand might be reduced by a severe recession.

Oil, gold reach new record prices

The spot price for gold also briefly hit a record above USD 1,030 an ounce.

Commodity prices have been boosted by the falling dollar, which hit a record low against the euro and fell to a 12-year low against the yen.

Oil prices have risen about 16 percent this year, gold is up 23 percent.

Investing in oil and gold is seen as a way of protecting against the dollar's weakness.

"The recent oil prices have been swayed by the currency moves, including this latest rally to a record," said Tony Nunan, risk management executive at Tokyo-based Mitsubishi.

"The dollar weakness is the factor at the moment." he added.

The dollar has been undermined by the credit crisis and the effect that is having on the U.S. economy.

The near collapse of Bear Stearns last week raised fears that US banks were struggling to cope with the credit crisis.

"Oil clearly led the way down," said David Holmes, director of metals sales at Dresdner Kleinwort Investment Bank.

"The market is incredibly jittery because of the financial situation," he said.

Looking ahead, analysts say the Fed could cut overnight rates by up to 125 basis points by the end of its meeting on Tuesday.

"What is really important for this week is to see what the Fed is doing," said Michael Widmer, analyst at Lehman Brothers.

In the long run, oil demand might be reduced by a severe recession.

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