Sunday November 29, 2009

COMEX gold futures fall from $1195 record as commodity prices slump on Dubai debt default fears

bloomberg.com :

Commodities prices slumped after Dubai sought to defer some debt payments, rattling investors and spurring a dollar rally. Gold for immediate delivery fell to $1,177.63 after touching a record $1,195.13 on 26 Nov 2009. Gold prices have advanced 33% in 2009, the best performance since 1979. Spot silver prices sank to $18.30 per ounce. NYMEX crude oil prices fell to $72.39 before paring losses. COMEX copper futures for Mar 2009 delivery fell to $3.1255 per pound. Nickel, zinc, tin and lead declined on the London Metal Exchange. Wheat prices fell $5.6975 a bushel on CBOT.

Commodities have gained 19% this year amid the deepest global recession since World War II. Copper and lead have more than doubled and oil prices are up 71% as Chinese demand expanded and producers curbed output. Dubai World's move to defer some payments on $59 billion of liabilities has raised debt default concerns. The global credit crisis has led to credit losses and writedowns of more than $1.7 trillion since June 2007, tipping the world into recession.

- It looks like gold prices, or rather, commodities prices in general, seem to be in correlation with the general equities markets these days. Just another whiff of the global credit crisis and global investors quickly stampede for the exits. As the Times Online reports :

The three foreign banks with the biggest exposure to the United Arab Emirates are British - Standard Chartered, SBC and Barclays. Standard Chartered, thought to have invested more than any other UK bank in the Middle East, dropped almost 6%, while HSBC lost 5%. "This is an important reminder that the credit crisis is forgotten but not gone," said Robert Rennie, strategist at Westpac Global Markets Group.

That's right. The global credit crisis may have been forgotten by most of the world but it certainly has not gone away. The looming Dubai debt default issue might just be the trigger event, a clear signal, that the contrarian community had been waiting for, leading to a potential second down-leg in the world economy and global markets. As is usual with these things, traders and investors alike would have to monitor the situation closely to see if this is just a one-off event, or the start of a series of converging events.

See also :

1. COMEX gold prices hit new record high of $1061.40 per ounce in third straight session
2. NYMEX crude oil prices hit $80, gold prices trade near $1070.80 record high
3. COMEX gold futures price hits new record high over $1111 as Dow rises 200 points
4. COMEX gold futures trading over $1152 as prices hit new record highs
5. Dubai debt default looms on $80 billion of loans, requests debt payment freeze

(2009-11-29 14:51:09 SGT) [Biz] Permalink

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