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Thursday, 13 September, 2001, 03:08 GMT 04:08 UK
Attacks shake oil and gold prices
gold bullion
Crude oil and gold bullion prices have lost some of the sharp gains seen immediately after the devastating terrorist attacks in the US.

Gold is often bought up as a safe option for investors facing great uncertainty in the stock markets.

And the oil price typically moves higher when there is a rise in tension in the Middle East, because of fears over security of supply.

The Middle East holds two-thirds of the world's crude oil reserves, but the threat of an immediate supply shortage eased on Wednesday.

Asia prices

Thursday saw crude prices fall back from prices established on Monday, with October Dubai - the benchmark for Asian oil operators - dropping about 60 cents to $25.75. Wednesday trading had pushed the price up to $31 a barrel

None of these things change Opec's decision to guarantee the stability of the oil market

Ali Rodriguez

In London, crude futures slid lower on Wednesday after a massive surge on Tuesday.

By the close, October crude oil was trading 3.6% lower at $28.00 after having leapt 13% at one point on Tuesday.

"The US may need to take action against the perpetrators of this act and the uncertainty lies in the fact that the violators may lie within or nearby oil-producing countries," said Peter Cockcroft, corporate adviser to the UK's Premier Oil.

Further significant movements in oil prices on expected to depend on indications of what form any retaliation from the US will take.

But the oil producing cartel Opec has already said it is committed to ensuring stable oil supplies following the attack and that Middle East supplies are not affected at present.

And analysts have confirmed that the cartel has plenty of spare capacity to meet demand, soothing the markets.

It's going crazy here. It's worse than the Gulf War

Rob Laughin, oil trader, on Tuesday

"None of these things change Opec's decision to guarantee the stability of the oil market," said Ali Rodriguez, secretary general of the cartel.

Tuesday's trading had been characterised by panic, with one London-based oil broker, Rob Laughin telling BBC News Online: "It is going crazy here. It is worse than the Gulf War."

Rush for gold

Gold had been out of favour for some years, seeing steady price falls. But the crisis recreated its status as a safe alternative for investors.

There was pure panic. The gold price went through the roof

Neil Stacey, trader at Cazenove

Still, the initial surge on Tuesday began to settle back, with volumes slowly returning to normal.

The markets were subdued: "It's just a case of waiting and seeing...a lot of liquidity has been taken out of the market because there is no trade in the US now," said one trader.

In Asia, the bullion price at 0117 GMT was $279.25 an ounce, steady from the close in London.

Joburg price leap

On Tuesday, gold had soared nearly 6% after the attacks, with the London benchmark price climbing to $287 in the afternoon from $271 in the morning.

Robin Bahr, metals analyst at Standard Bank, London, said: "There is panic buying of metals, gold and oil - it is complete pandemonium."

In Johannesburg, a big world centre for gold trading, gold prices had leapt to $289.9 an ounce on Tuesday, from $271.15.

Nymex evacuated

The New York Mercantile Exchange (Nymex) - the world's largest physical commodities exchange - will not open for trade on Wednesday following Tuesday's attacks, although no decision has yet been made on whether to start electronic screen trade in the US.

A Nymex spokeswoman said she understood there had been no damage to the exchange building itself which is situated just a few hundred metres from the World Trade Center.

The exchange had not yet opened for business when the planes hit the World Trade Center at about 0900 local time, but its trading floor was immediately evacuated and trade suspended.

Nymex is mulling whether to start electronic trade of crude oil, petroleum products and precious metals on its electronic system later on Wednesday, and has consulted with the industry to make a decision.

See also:

12 Sep 01 | Business
US attacks hit global markets
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