NEW YORK (Dow Jones)--Gold prices edged higher on stronger demand for safe-haven assets Monday, while platinum and palladium tumbled as Japanese car makers shut production in the wake of a massive natural disaster.
The most actively traded gold contract, for April delivery, settled up 0.2%, or $3.10, at $1,424.90 per troy ounce on the Comex division of the New York Mercantile Exchange.
The thinly traded March delivery contract ended up 0.2%, or $3.10, at $1,424.60 per troy ounce.
Investors flocked to gold, shedding riskier assets, as they scrambled to asses the likely impact of Japan's earthquake and tsunami on the global economy.
"It's one event after another that benefit gold. We constantly see this emphasis on a flight to safety and quality - attributes that boost gold," said Bill O'Neill, a principal with LOGIC Advisors.
Meanwhile, platinum and palladium both settled at a two-month lows after Japanese car makers suspended production due to rolling power balckouts, damaged facilities and logistics disruptions following the natural disaster.
The noble metals are widely used in car exhaust filters, known as catalytic converters, leaving their prices sensitive to disruptions in the automotive sector.
Japan is a major consumer of both metals, accounting for 15% of global platinum demand and 16% of global palladium consumption according to Barclays Capital.
Platinum for April delivery, the most actively traded contract, ended down 1.7%, or $ 29.40, at $1,752.30 per troy ounce on the New York Mercantile Exchange.
Palladium for June delivery, the most actively traded contract, settled down 2.3%, or $17.30, at $748.20 per troy ounce on the NYMEX.
Japan now faces the largest reconstruction effort since World War II. Much of the basic infrastructure like houses, office buildings and roads, was damaged by the earthquake and subsequent tsunami, and clean up and insurance costs alone are estimated in the tens of billions.
The Bank Of Japan added a record Y15 trillion into money markets Monday to soothe liquidity concerns in the wake of the natural disaster. While it will take months to calculate the exact cost of the damage, Boston-based AIR Worldwide estimated insured property losses to run between $15 billion to $35 billion.
"If anything, down the road this will add to inflation pressures as Japan has to rebuild," said Ira Epstein, director of the Ira Epstein division of the Linn Group.
The move to rebuild is likely to benefit gold prices, as higher-than-expected demand for raw materials from Japan will likely boost global commodity prices and ramp up global inflation rates. Gold is considered a hedge against inflation, and tends to grow in value as inflation rates rise.
Japan's troubles overshadowed civil unrest in the Middle East, which continues to lend support to gold prices. In Libya, forces loyal to Col. Moammar Gadhafi launched a fresh assault into rebel strongholds in the country's east.
Meanwhile, Saudi Arabia and other Gulf Cooperation Council states sent troops to Bahrain to help suppress violent antigovernment protests in the Kingdom.
"This is the first full business day after the Japanese disaster, Libya will take a back seat... The attention has shifted for a while, but it will shift back," said Epstein.
Source: http://online.wsj.com
No comments:
Post a Comment