War fears lift precious metals

news.ft.com By Ivar Simensen in London Published: January 31 2003 21:41 | Last Updated: January 31 2003 21:41

Prices of precious metals eased slightly on Friday after hitting new highs this week as investors sought shelter in commodities amid concerns about war in Iraq.

The recent weakness of the dollar has also helped make prices more attractive for non-US investors.

Spot gold rose to $371.50 per troy ounce in London on Friday, in sight of the six-year high of $372.60 from earlier in January, before easing back in afternoon trade to $367.50 as the dollar recouped some lost ground. Over the week, gold prices were $1.50 higher, adding to the $9 gain in the previous week.

Silver also fixed higher in the morning in London, hitting 487.25 an ounce, up from 478.50 cents in the previous morning fix, before sliding back to 484 cents by the afternoon.

Platinum slipped from Thursday's 17-year high, fixing at $667 an ounce. Traders said buying was boosted by US president George W. Bush's call for more research into fuel cell technology in his State of the Union speech on Tuesday. Fuel cells rely on platinum as a catalyst to produce electricity without pollution. The metal hit $673 an ounce on Thursday, its highest level since September 1986.

Crude oil prices firmed over the week after comments from President Bush and UN weapons inspector Hans Blix increased the likelihood of a war against Baghdad. Iraqi president Saddam Hussein replied by saying he would attack oil-rich Kuwait in case of an attack on Iraq.

In Venezuela, president Chavez continued his battle with striking oil workers. The Venezuelan government claimed daily oil production had risen to 1.4m barrels while the opposition said it remained at just above 1m. Venezuela produced more than 2.5m barrels a day before the general strike started in early December.

Brent crude futures slipped 11 cents to $31.10 per barrel on Friday but firmed 4.4 per cent over the week from last Friday's close of $29.65.

In New York, WTI settled 34 cents lower at $33.51 by the close.