CHICAGO (Reuters) - Gold prices rose to 16-year highs on Tuesday,
spurred on by ``buy'' signals in technical price charts and fears
that inflation, seemingly under control, could rise again in the
months ahead.
Oil prices fell to their lowest levels in nearly seven weeks as
growing petroleum supplies tempered fears of market shortages that
recently sent prices to historic highs.
Gold futures for December delivery (GCZ4) on the New York
Mercantile Exchange's COMEX division climbed $2.80 to $436.20 an
ounce after trading as high as $437.50, the highest price for a most
actively traded futures month since July 1988.
``Inflation may be calm temporarily, but I think gold is reflecting
that, on a longer-term basis, inflation is something we haven't
taken care of yet and it may rear its ugly head once again,''
said Carl Birkelbach, president of Birkelbach Management Corp.
in Chicago.
He said gold has the potential of rising to $500 after surpassing
$433.00 an ounce, a point of resistance on price charts which
technical traders interpret for price direction.
Investors turn to gold as a haven in turbulent times. Economic
uncertainty, geopolitical worries and fears of inflation due to high
oil prices have all supported the precious metal.
The weak dollar has also bolstered gold by making the
dollar-denominated commodity cheaper for buyers using foreign
currencies.
At the New York Mercantile Exchange, crude oil futures for
December delivery (CLZ4) settled at $47.37 a barrel, down $1.72, or
3.5 percent. It was the contract's lowest level since the Sept. 21
settlement of $47.10, and the day's low of $47.20 was the lowest
price for prompt crude since Sept. 22.
The oil market has fallen more than $8, or nearly 15 percent,
from the record $55.67 set on Oct. 25.
Twelve industry analysts in the latest Reuters survey expected an
average increase of 2.1 million barrels in U.S. crude stocks for the
week to Nov. 5.
Should the survey hold when the U.S. Energy Information
Administration releases its inventory data Wednesday morning, it
will be the seventh week in a row that domestic crude supplies have
increased.
The analysts also expected an average rise of 200,000 barrels in
distillates, including heating oil and diesel fuel, and a 1.1
million barrel rise in gasoline stocks.
``The prevailing assumption now is that stocks will continue to
accumulate and it will take some actual supply disruption to avert a
further rise in stocks and move to lower price levels that such a
flow implies,'' said Tim Evans, senior energy analyst at IFR Energy
Services.
Cocoa prices extended their recent sharp gains as political
violence in the world's top cocoa bean grower, Ivory Coast,
continued to threaten the flow of fresh supplies to the world
market.
On the New York Board of Trade, front-month December cocoa
futures (CCZ4) rose $14 to settle at $1,806 a ton.
Most exporters in Ivory Coast remained closed on Tuesday
following three days of anti-French violence by supporters of
President Laurent Gbagbo in the former French colony.
At least three people died and several protesters were wounded
when French soldiers fired to disperse protesters supporting Gbagbo
in the main city of Abidjan.
Cocoa futures have jumped about 24 percent since last Thursday
when government forces began pounding rebels in northern parts of
the country.
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