Daily Times

PARIS: Most commodity prices were sent tumbling on Friday following surprise British vote to leave the European Union, but gold benefitted from a flight to safety. With the vote clouding global growth prospects, a sell-off swept commodities. Oil prices were hit particularly hard as the dollar leapt in value against most currencies. Brent North Sea crude at one point on Friday morning touched a low of $47.54 per barrel – reversing gains made over the week and 3.0 percent lower than the previous week’s closing price. With crude priced in dollars, demand slides from countries that use other currencies when the US unit rises in value. Crude futures came under pressure this week also from a smaller-than-expected fall in US crude inventories, adding to concerns about weak demand in the world’s biggest economy and abundant global supplies. By 1330 GMT, Brent stood at $48.31 per barrel – down 5.0 percent in Friday trading and 1.7 percent over the week. US oil prices also fell as markets opened, hitting $47.57 per barrel by 1400 GMT – completely wiping out gains made over the week. Base industrial metals began sliding as soon as initial vote counts emerged early on Friday morning, with nickel the biggest loser at 4.5 percent. Tin was close behind, suffering a fall of 4.4 percent to a three-week low of $16.485 on the London Metal Exchange. But the metals’ slip was braked by continuing confidence in China, where stock markets remained calmer than other Asian bourses in the wake of the UK referendum. With China the largest consumer of industrial metals worldwide, stable confidence there limited the price impact from Brexit. Commerzbank analysts suggested that markets would likely right themselves after the initial shock as investors turn their gaze back to fundamentals. Cocoa prices — already on an upward trend after a hot, dry summer in Ivory Coast hit production — surged further in Friday trading in London to 2.325 pounds. “Volatility linked to Brexit is likely to strongly affect cocoa prices in the short term,” said Sebastien Marlier of the Economist Intelligence Unit, adding that the weak pound would likely push prices yet higher. Slowing demand from China and the impact of the UK referendum sent sugar prices tumbling to a two-week low of $0.1853. And coffee prices fell on news that a strong harvest is expected in Brazil. Many investors sought safe haven in gold on Friday morning, with the precious metal spiking to a two-year high of $1,359.08 per ounce. Prices had been on a downward trend over the week before British referendum results began filtering out early on Friday morning. “Gold is soaring as investors flock to relative safety,” said Joe Rundle, head of trading at ETX Capital in London. “Leave’s victory has delivered one of the biggest market shocks of all time,” he went on. “We’ve never seen anything like it.”