Commodities - Gold ends steady, oil soft, cocoa soars

Forbes.com-Reuters, 04.22.03, 5:18 PM ET   CHICAGO (Reuters) - Gold edged up to another three-week high Tuesday, piggybacking off a weaker dollar that drew in European demand before a rally in Wall Street stocks diluted investor interest in the safe-haven metal. In other commodity markets, oil prices closed lower as the May crude oil contracts expired at the end of the day. Cocoa prices spiked higher as speculators dove back into the market but grain prices closed mostly lower on cash market signals. At the COMEX, gold for June delivery closed up 90 cents at $334.80 an ounce, trading down from an early peak at $336.80, which was its best price since April 2. On Monday, New York gold traders had pushed the contract up by $6.30 while London, Sydney and Hong Kong were out of the liquidity pool on a four-day Easter holiday break. Gold bullion closed at $334.00/70, up from Monday's late quote at $333.20/95. London bullion dealers had earlier fixed their afternoon spot reference price at $334.90. World financial markets are back to worrying about economic growth and profits now that the United States has shifted from waging war in Iraq to rebuilding, hunting for suspected weapons of mass destruction and searching for former Iraqi officials. The euro rose to $1.1002 Tuesday, the highest since it neared a four-year peak March 12, which made dollar-priced gold more affordable to European investors. But the euro trimmed gains on rumors that former Iraqi leader Saddam Hussein had been captured, which also helped the Dow Jones industrial average bounce from a 60-point morning loss to close 156 points higher at 8,484. Wall Street's recovery also allowed silver -- more sensitive to industrial demand than gold -- to grab the baton and sprint to its best level in more than five weeks. May silver closed 6.2 cents higher at $4.597 an ounce. "As long as you see the dollar continue to remain pressured, then I think you can continue to see upside in gold," said analyst David Meger at Alaron Trading in Chicago. "One of the things that could stop that would be a strong continuation of the equity market rally." At the New York Mercantile Exchange, May crude oil futures closed 3 percent lower as speculators exited before expiry. A sharp drop in oil product prices and squaring ahead of weekly U.S. petroleum inventory data also added to the day's slump. NYMEX May crude oil closed 96 cents lower at $29.91 a barrel. In London, Brent June crude fell 42 cents at $25.46. Gasoline futures sank as the cash market at the Gulf of Mexico weakened, with traders reporting Gulf refiners selling, not buying, gasoline. Venezuelan state oil firm Petroleos de Venezuela also lifted a force majeure, or suspension, of gasoline exports, weighing on gasoline prices. May gasoline closed 3.24 cents lower at 87.74 cents a gallon. May heating oil fell 2.22 cents a gallon at 77.86. The main event of the week remains the Thursday meeting in Vienna of the Organization of Petroleum Exporting Countries. OPEC producers are worried that American oil firms will follow U.S. tanks into Baghdad, spurring sharp rises in crude output under a new Iraqi government. For years, OPEC could rely on Saddam's sanctions-hobbled production to prop up prices. Now it must brace for a resurgent Iraqi oil industry with the potential to join leading OPEC player Saudi Arabia and non-OPEC Russia in the world's top three "swing" producers. Iran has already raised the prospect of an OPEC price war, music to the ears of economies hamstrung by soaring oil costs. "Iraq for many years has been a huge factor supporting oil prices," said Gary Ross at the PIRA Energy consultancy. "That's no longer the case. Now Saddam has gone, the perceptions of how OPEC can manage the market have changed." At the New York Board of Trade, cocoa soared as a wave of buying based on chart-watching speculators began in London and carried over "across the pond" to New York. Cocoa for May delivery closed $87 higher at $2,008 per metric ton, the first close over $2,000 since April 9. Physical cocoa supplies keep tightening after months of civil war in top producer Ivory Coast. There were no delivery notices tendered against the May contract Tuesday, leaving the cumulative total at just 7 lots. At the Chicago Board of Trade, wheat and soybeans closed lower on cash market signals. Soybean barges traded 2-3 cents a bushel lower at the U.S. Gulf of Mexico export gateway Tuesday, pressuring futures. In Toledo, Ohio, more wheat was registered as eligible for delivery against May CBOT futures, surprising a market worried about tight old-crop supplies. Wheat for May delivery closed 2 cents a bushel lower at $2.88-1/4 and May soybeans fell 6-1/2 cents at $6.10 a bushel. Corn for May delivery closed unchanged at $2.38-3/4.