CURRENCY ASIA
Gold, oil hover near record highs on weak dollar
By Ben Sheppard
Agence France-Presse
First Posted 17:51:00 03/14/2008
HONG KONG -- Global commodities markets were bubbling on Friday after gold briefly peaked at over $1,000 an ounce, oil hit new highs and the dollar tumbled.
Hong Kong gold prices finished the day close to the symbolic $1,000 an ounce mark that was breached for the first time Thursday on the London Bullion Market.
The plunging dollar and the precious metal's traditional role as a safe haven amid fears of rising inflation have caused gold prices to surge about 17 percent so far this year.
Investors are funnelling cash into commodities generally as they seek a refuge from volatile world stock markets and growing fears of a US-led economic slowdown, traders said.
In Hong Kong, gold prices closed Friday at $995.00-$995.50 an ounce, up from Thursday's close of $987.10-$987.60.
Oil simmered down on Friday after hitting a record $111.00 per barrel the previous day, but analysts said prices remained on the boil due to the ailing greenback.
New York's main oil futures contract, light sweet crude for delivery in April, was at $109.78 per barrel in Asian trade, down 55 cents from its all-time closing high of $110.33 in New York.
In earlier frenzied US trading, the contract had struck $111.00 for the first time.
"We are seeing only a marginal movement," said David Moore, a commodity strategist with the Commonwealth Bank of Australia in Sydney, noting that prices remained high.
The dollar fell below the key 100-yen level Friday for the second day in a row, flirting with fresh 12-year lows amid mounting fears of a US recession.
The dollar dropped to as low as 99.83 yen in Asian trade, approaching Thursday's trough of 99.78, which was the weakest since November 1995.
It recovered slightly to stand at 100.15 in late Tokyo trade, down from 100.60 in New York on Thursday.
"Resistance to a falling dollar has evaporated as the market is unable to see a drastic improvement" in the subprime crisis, said Saburo Matsumoto, chief forex strategist at Sumitomo Trust Bank.
The euro firmed to $1.5640 in Tokyo from $1.5624 in New York, close to its all-time high of $1.5645.
Many analysts now expect the US Federal Reserve to cut its key lending rate by as much as three-quarters of a point next week. Investors generally prefer the currencies of countries that have higher interest rates as they can reap better yields.
In Washington, US Treasury Secretary Henry Paulson insisted Thursday that a strong dollar "is in our nation's interest" and said he would like to see the currency strengthen.
Paulson acknowledged the US economy was suffering but said: "Our economy, like any other, has got its ups and downs but the long-term fundamentals are strong and I believe it's going to be reflected in the currency market."
In Asian markets on Friday, Hong Kong's Hang Seng Index closed down 0.30 percent after an early rebound faded, while Japanese shares closed down 1.54 percent at the lowest level for two years and seven months.
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