NEW YORK: Gold is dusting off its credentials as the go-to commodity in troubled times and its producers are reaping the benefits.
Futures rallied above $1,100 an ounce to a two-month high, after a sell-off in Chinese shares forced the country’s stock exchanges to shut for a second time this week, spurring demand for a haven.
Global markets are facing a crisis and investors need to be very cautious, billionaire George Soros said.
Shares of bullion miners including Barrick Gold Corp. are climbing, even as the 80-member Bloomberg World Mining Index slides to the lowest in more than a decade.
“You are seeing a flight to safety which is causing the price of the metal to improve which is then flowing into the stocks,” Josh Wolfson, an analyst at Dundee Securities Ltd., said by telephone from Toronto.
“Certainly I would expect the price of the metal to outperform. However, outperform doesn’t necessarily imply a positive return.”
After posting three straight annual declines, bullion is topping other commodities this month amid weakness in China’s currency and stock market and geopolitical tensions in the Middle East and North Korea.
Soros told a forum in Colombo, Sri Lanka, that China is struggling to find a new growth model and its currency devaluation is transferring problems to the rest of the world.
The current environment “reminds me of the crisis we had in 2008,” Soros said.
Bullion futures rose 5.5 percent that year, at the start of the global financial crisis, then rallied 24 percent in 2009 and 30 percent the following year.
Gold futures for delivery in February gained 1.5 percent to settle at $1,107.80 at 1:48 p.m. on the Comex in New York, after reaching $1,109.30, the highest for a most-active contract since Nov. 6. Prices are up for a fifth session, the longest run since October.
Most of the 22 raw materials in the Bloomberg Commodity Index are down this year. A gauge of industrial metals fell to the lowest in more than a decade, while oil prices have dropped to the lowest in 12 years.
While the Bloomberg World Mining Index slumped to the lowest since 2004, gold miners are bucking the trend, with Gold Fields Ltd. climbing as much as 8.5 percent in Johannesburg, while Barrick rallied to the highest since July in Toronto.
“It’s really the producers that people are looking at,” Kerry Smith, an analyst at Haywood Securities Inc., said by telephone from Toronto.
“Given that the markets are so choppy and weak, I would have thought it would have been more of a safe haven trade.”
China’s CSI 300 Index tumbled 7.2 percent on Thursday before trading was halted, while the onshore yuan weakened against the dollar to a five-year low after the central bank cut its reference rate by the most since August. China’s regulator called an unscheduled meeting on the stock market, according to a person with direct knowledge of the matter. “It’s all about China and turmoil in the global markets,” said Robin Bhar, a London-based analyst at Societe Generale SA.
“China devaluing the yuan has stoked fear over the weakness of the global economy and that’s good for gold.”
Silver futures also gained on the Comex.
Platinum rose on the New York Mercantile Exchange, while palladium fell.
Gold is turmoil’s beneficiary as Soros recalls 2008 crisis
Gold is turmoil’s beneficiary as Soros recalls 2008 crisis
European gas prices soar almost 50% as Iran conflict halts Qatar LNG output
- Analysts warn prolonged disruption could push prices higher
- Some shipments of oil, LNG through Strait of Hormuz suspended
- Benchmark Asian LNG price up almost 39 percent
LONDON: Benchmark Dutch and British wholesale gas prices soared by almost 50 percent on Monday, after major liquefied natural gas exporter Qatar Energy said it had halted production due to attacks in the Middle East.
Qatar, soon to cement its role as the world’s second largest LNG exporter after the US, plays a major role in balancing both Asian and European markets’ demand of LNG.
Most tanker owners, oil majors and trading houses have suspended crude oil, fuel and liquefied natural gas shipments via the Strait of Hormuz, trade sources said, after Tehran warned ships against moving through the waterway.
Europe has increased imports of LNG over the past few years as it seeks to phase out Russian gas following Russia’s invasion of Ukraine.
Around 20 percent of the world’s LNG transits through the Strait of Hormuz and a prolonged suspension or full closure would increase global competition for other sources of the gas, driving up prices internationally.
“Disruptions to LNG flows would reignite competition between Asia and Europe for available cargoes,” said Massimo Di Odoardo, vice president, gas and LNG research at Wood Mackenzie.
The Dutch front-month contract at the TTF hub, seen as a benchmark price for Europe, was up €14.56 at €46.52 per megawatt hour, or around $15.92/mmBtu, by 12:55 p.m. GMT, ICE data showed.
Prices were already some 25 percent higher earlier in the day but extended gains after QatarEnergy’s production halt.
Benchmark Asian LNG prices jumped almost 39 percent on Monday morning with the S&P Global Energy Japan-Korea-Marker, widely used as an Asian LNG benchmark, at $15.068 per million British thermal units, Platts data showed.
“If LNG/gas markets start to price in an extended period of losses to Qatari LNG supply, TTF could potentially spike to 80-100 euros/MWh ($28-35/mmBtu),” Warren Patterson, head of commodities strategy at ING, said. The British April contract was up 40.83 pence at 119.40 pence per therm, ICE data showed.
Europe is also relying on LNG imports to help fill its gas storage sites which have been depleted over the winter and are currently around 30 percent full, the latest data from Gas Infrastructure Europe showed. In the European carbon market, the benchmark contract was down €1.10 at €69.17 a tonne
