A speculative mania combined with strong fundamentals drove gold and platinum prices to record levels on Thursday. Spot gold has been $953.60 a troy ounce, up from an earlier record high of $948.60. Gold is seen as a hedge against financial market turbulence. It has gained more than 40 percent since last August when the credit market crisis erupted. The precious metal is also used as a hedge against price pressures, which are accelerating. The prospect of more rate cuts in the United States supported gold’s appeal as an alternative investment and kept the upward momentum intact. Bullion has risen as much as 14.4 percent so far this entire year. Gold could also undergo a correction but a price dip would attract buying interest from main consumer India ahead of the busy marriage season in April, when demand for gold jewellery picks up.

US crude oil hit an all – time high of $101.32 a barrel last week. Robust demand for crude, supply disruptions and weak US dollar have triggered the rally from a dip below $50 at the start of 2007. Adjusted for inflation, oil is only just below the $101.70 peak hit in April 1980, according to the International Energy Agency, a year after the Iranian revolution. Investment flows from pension and hedge funds into commodities including oil have boomed, as has speculative trading. The fall in the value of the dollar against other major currencies has helped drive buying across commodities as investors view dollar assets as relatively cheap. It has also reduced the purchasing power of OPEC’s revenues and increased the purchasing power of some non – dollar consumers. While previous price increases have been triggered by supply disruptions, demand is a main driver of the current rally. Global demand growth has slowed after a surge in 2004 but is still rising, despite an economic slowdown in top consumer the United States. A row between OPEC member Venezuela and Exxon Mobil Corp, has prompted price gains this week. Another reason of rising prises, supply of crude from Nigeria, Africa’s largest oil exporter, has been cut since February 2006 because of militant attacks on the country’s oil industry. Oil companies have detailed about 515,000 bpd of shut Nigerian production due to militant attacks and sabotage.

The dollar was stuck near two – week lows versus the euro on Friday after data showing the weakest regional factory activity since the last US recession in 2001 boosted expectations for a large Federal Reserve interest rate cut. Many market players expect the Fed to slash overnight rates by another 50 basis points at its next meeting in March to 2.50 percent. The dollar has been hit by the prospect of lower rates, which would erode the currency’s appeal to investors, just as market players have reduced expectations for the European Central Bank rate cuts this year due to inflation pressures in the euro zone. Weekly jobless claims data also showed more workers were remaining on US state unemployment rolls. The euro was little changed at $1.4802, after climbing to a two – week peak of $1.4838 on Thursday.