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Gold prices reach 2-month high Brent crude hits 9-month peaks amid Iraq violence

LONDON, June 21, (AFP): Crude oil and metals prices rallied this week on escalating violence in Iraq, a weaker dollar and on Chinese growth prospects, traders said.

Oil: Brent hit nine-month peaks as dealers tracked the unfolding sectarian conflict in crude-exporting Iraq.
“Predominant gains this week have derived from the ongoing siege of Iraq’s largest oil refinery, Baiji,” said Dorian Lucas, an analyst at energy consultancy Inenco. “Thus far the gains in Brent crude are based around sentiment that oil supplies from OPEC’s second largest producer may be disrupted. “Even with the siege of the Baiji oil refinery, no export supply has been disrupted, as this facility is used for the production of domestic consumption products,” he noted.

On Thursday, Brent reached $115.71 a barrel — the highest point since September. Brent is a benchmark for the pricing of Middle East crude. “Oil saw support from the risk of conflict in Iraq disrupting oil supplies, as the US said it would send military advisers to the country,” Singapore’s United Overseas Bank said in a note to clients. US President Barack Obama on Thursday announced that he was ready to send 300 advisers to Iraq and if necessary to take “targeted” and “precise” military action to counter radical Sunni fighters. “We will help Iraqis as they take the fight to terrorists who threaten the Iraqi people, the region and American interests as well,” he said.
 

Washington has already positioned an aircraft carrier in the Gulf and is also considering using drone strikes against the militants.
A Congressional source has said US Secretary of State John Kerry will travel to Iraq “soon”.
The militants have captured swathes of the country’s north but have yet to directly threaten the key oil-producing region in the south.
The crisis has rocked the global oil market because Iraq is the second-biggest producer within the 12-nation Organization of Petroleum Exporting Countries (OPEC).
The country has more than 11 percent of the world’s proved resources and produces 3.4 million barrels a day.
 

By Friday on London’s Intercontinental Exchange, Brent North Sea crude for delivery in August stood at $114.66 a barrel compared with $113.29 for the July contract one week earlier.
On the New York Mercantile Exchange, West Texas Intermediate or light sweet crude for July gained to $107.13 a barrel compared with $106.64 a week earlier.
Precious metals: Haven investment gold rallied on investor concern over Iraq, which pulled sister metal silver up to a three-month high of $20.98 an ounce on Friday.
Gold reached a two-month peak of $1,322.41 an ounce on Thursday.
Precious metals benefitted as the dollar weakened against rival currencies, pushing up demand for commodities priced in the US unit.
 

The dollar fell after Federal Reserve chief Janet Yellen on Wednesday said the US economy had picked up after the first quarter’s contraction. However, she also downplayed a pickup of inflation as any sign of a need to tighten monetary policy.
Elsewhere, the “instability in Iraq is raising concern that the whole region is at risk of falling into a sectarian war which could materially affect the supply of oil and as such gold once more offers a safe haven refuge for investors”, the bank added in a client note.
By Friday on the London Bullion Market, the price of gold jumped to $1,312.50 an ounce from $1,273 a week earlier.
Silver increased to $20.62 an ounce from $19.58.
On the London Platinum and Palladium Market, platinum climbed to $1,456 an ounce from $1,437.
Palladium advanced to $829 an ounce from $816.
Base metals: Prices rose across the board, with zinc reaching a 16-month high at $2,179 a tonne on Friday.
 

China, the world’s second largest economy after the United States, needs vast supplies of commodities, especially of metals, to power its growth.
Three-month aluminium increased to $1,894 tonne from $1,841.50.
Three-month lead grew to $2,146 a tonne from $2,080.
Three-month tin gained to $22,650 a tonne from $22,600.
Three-month nickel advanced to $18,523 a tonne from $18,087.
Three-month zinc jumped to $2,172.25 a tonne from $2,083.
Cocoa: Futures hit near three-year highs at $3,128 a tonne on Thursday but gains could be capped ahead.
 

On the ICE Futures US exchange, cocoa for September grew to $3,116 a tonne from $3,069 a week earlier.
Coffee: Prices retreated, with Arabica reaching four-month lows at 166.55 US cents a pound on Thursday.
On LIFFE, Robusta for September slipped to $1,978 a tonne from $1,988 for the July contract a week earlier.
Sugar: Futures rose sharply on the prospect of tighter Brazilian and Indian supplies, traders said.
On ICE Futures US, the price of unrefined sugar for October rallied to 18.63 US cents a pound from 17.60 US cents a week earlier.
Rubber: Prices in Kuala Lumpur extended gains as the ringgit weakened against the US dollar, boosting demand for the commodity.
The Malaysian Rubber Board’s benchmark SMR20 rose to 173.60 US cents a kilo from 168.55 cents a week earlier.

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