Commodities

Rio chief executive Tom Albanese says demand remains strong for minerals even though it has slowed in the past six months. He also said the company would not be hit hard.

"Supply and demand conditions point to commodities markets and prices staying strong," he said.

"While there are signs of nervousness, lack of inventory in the supply chain suggests the impact of the current economic concerns on our business will be limited, unless of course the financial markets substantially deteriorate."

Nippon Steel from Japan have agreed to a 65% rise in the price the company will pay for iron ore in term contracts which begin effective on April 1: Which will be great for Rio Tinto and BHP. A price rise of 50% or more has been widely expected after record highs in 2007 and continuously strong Chinese demand. Traditionally, all steel mills accept whatever price is first settled by any steel mill and one of the three top miners, Brazil's Vale or Rio Tinto and BHP Billiton.

Investment funds are driving the increased demand for precious metals. These price levels haven't been reached in two decades for both gols and silver prices. Higher price levels for gold and silver were driven by turmoil in the Middle East, rising oil prices and a weakening US dollar. The active June contract for gold peaked at $US623 an ounce on Tuesday 18th April 2006. Gold futures haven't seen this since 1980. for silver, May silver, the most active silver contract, hit a high of $US13.68 an ounce, a price not seen since 1983.

With the fall in Oil and Gold recently some traders have probably undertaken some profit taking strategies. There is still Hope for the Resources sector - the fall was governed by no more than "Fear" and "Greed". There may be more volatility in the forthcoming market sessions with fingers pointing to an amount of speculative money that was driving up oil, gold and base metals prices in the beginning of 2006. GSJB Were reckons not to lose hope on the resources sector.

World oil prices surged to the highest levels in almost three months after Russia's energy row with neighbour Ukraine disrupted gas supplies across Europe, hit also by cold weather.

New York's main contract, light sweet crude for delivery in February, rocketed $US1.96 to $US63 per barrel in pit deals, compared with Friday's close before the long New Year holiday weekend.

Gold opened weaker in Asia on Tuesday after soaring overnight to fresh quarter century highs above $US540 an ounce on frantic buying by momentum-chasing speculative funds. Analysts say investors were keen to take profits ahead of Wednesday's anticipated interest rate rise by the US Federal Reserve.

OPEC members gathering in Kuwait overnight looked poised to hold their production quotas, but pressure was growing for another meeting next month to address an expected drop in demand for oil.

Ministers from the 11-nation Organisation of the Petroleum Exporting Countries meet on Monday in Kuwait City, where they are expected to maintain the quota of 28 million barrels per day (bpd).

Opinions are split however on whether OPEC should renew a pledge to make an extra two million bpd available to the oil market for another three months.

Gold has broken above $US500 an ounce it is soaring. The spot gold price jumped more than $US7 an ounce, or 1.4 per cent, in New York to close at a new 24-year high of $US529.50.

Gold rallied 4.6 per cent last week, its biggest weekly gain in almost four years, on heavy buying from the Middle East and Asia, where investors have been mopping up the precious metal to diversify from the US dollar and US-dollar-denominated assets.

The World Gold Council said demand for coins, bars and bullion-backed shares jumped 56 per cent in the July- September period.