GOLD prices climbed further yesterday, hitting a six-year high of US$364.50 in Asia trading as heightened fears of war between the US and Iraq prompted investors to pour money into the traditional safe haven.
The weakening US dollar also helped lift the price of the precious metal. The greenback was traded at 118.02 yen, and at 0.9305 euro the lowest level since October 1999 in early London trading
However, crude oil prices slipped back in Asia trading yesterday on news that Venezuelan exports would rise soon as a result of cracks in the seven-week long strike in the country.
Malaysia's benchmark Tapis crude was quoted at US$32.08 per barrel at the close of Asia trading, down three cents, while Brent crude was traded at US$31.74 per barrel in early London trading yesterday, down from US$31.80 the previous day.
Further gains (on gold) look likely while geopolitical tensions remain high, Reuters quoted John Reade, metals analyst at UBS Warburg, as saying.
Growing fears of war has created demand for low-risk assets such as gold, bonds and the Swiss franc, the currency also a traditional safe haven. Swiss franc neared a four-year high of 0.7349 against the greenback.
The price of gold has surged US$18 or 5% since the beginning of this year. Gold soared 25% last year to make it one of the year's star performing assets.
In India, people were seen lining up outside certain jewellery shops to take advantage of the strong price to sell their gold jewellery and coins.
To manage the crowds, jewellers are issuing tokens, Reuters quoted Suresh Hundia, president of the Bombay Bullion Association, as saying.
The jewellers were buying old ornaments at a discount to current prices and recycling them, instead of using new gold bars, traders said.
India is the world's largest bullion consumer because gold jewellery is an essential part of Hindu marriages. And, demand for gold is expected to rise with the wedding season from mid-January to March.
Crude oil prices, analysts said, would continue to be buoyed by geopolitical tensions despite their softness in Asia trading.
But they do not expect a smooth uptrend as in the gold price because of the operations of the Organisation of Petroleum Exporting Countries (Opec).
Opec's basket price surged to US$30.90 per barrel yesterday, a level that was substantially higher than the US$22-US$28 that the grouping intends to maintain.
Opec has also agreed to increase output by 1.5 million barrels per day effective next month.
But, two members, Saudi Arabia and Indonesia the only Asian Opec members have already indicated the need for another rise in oil supply to curb the strong surge in fuel prices.
On the base metal market, tin prices jumped to a 19-month high in Kuala Lumpur yesterday, extending its recent gains on the back of a bullish London Metal Exchange (LME).
The spot tin price rose US$75 to US$4,550 per tonne, the highest since June 2001. The metal has risen US$230 or 5.3% in the last two weeks.
The strike in Bolivias biggest tin mine that began on Saturday, sparked by the death of a miner, had also lent support to tin prices. Workers had since returned to work on Wednesday.
Given the bullish sentiment in the LME, traders are looking at US$4,600 per tonne in the near term.
The recovery in the tin price was due mainly to the continued Indonesian government ban, since June last year, on exports of Indonesian tin by companies other than PT Timah Tbk and PT Koba Tin.
But some traders cautioned that current prices could encourage the smuggling of ore from Indonesia, as unsold stocks were building up on the main producing island of Bangka.
Despite the ban, hundreds of miners on Bangka continued mining, hoping the two producers operating on the island would keep buying their ore.
Some traders said unsold tin stocks on Bangka were estimated at more than 10,000 tonnes.