Gold price hike

Gold and silver tumbled on Tuesday as investors sold on uncertainty about the direction of monetary policy in the United States, but a softer dollar helped support prices and sentiment. Gold hit a record high of $1,518.10 a troy ounce on Monday. It was last bid at $1,504.36 from $1,508.45 on Monday. Spot silver ceded nearly 5 per cent to $44.61 an ounce after touching $49.31 an ounce on Monday, within reach of $49.48 hit in January 1980. It was bid at $45.77 an ounce at 1143 GMT from $46.90 late in New York on Monday and is heading for its biggest daily loss since March 15. ‘The rally has been strong, it’s not surprising to see profit-taking ahead of the FOMC meeting,’ said Peter Fertig, a consultant at Quantitative Commodity Research. ‘Markets expect it will be a dovish statement from the US Fed, but there are worries about them ending (Quantitative Easing) ahead of time.’ Tighter US policy would mean less cash floating around the financial system looking for a home and fewer worries about inflation, which investors protect against by buying gold. The Federal Open Market Committee meeting starts later on Tuesday and concludes on Wednesday. The US central bank is expected to confirm it will stick to plans to complete a $600 billion bond-buying program. The post-meeting news conference by Fed chairman Ben Bernanke on Wednesday will be the first regularly scheduled briefing by a Fed chief in the bank’s 97-year history. ‘The ... meeting is a possible event risk but we believe post-meeting comments will confirm that US short-term rates will remain low for the time being which would be positive for precious metals,’ Credit Suisse Private Banking said in a note.

ADB's food warning to ASIANS

Soaring global food prices threaten to push tens of millions of Asians into extreme poverty and cut the region’s economic growth this year, the Asian Development Bank warned in a report Tuesday. Coupled with skyrocketing oil prices, the spike poses a serious setback for developing Asia after having rebounded rapidly and strongly from the 2008 global economic crisis, said chief ADB economist Rhee Changyong. ‘Left unchecked, the food crisis will badly undermine recent gains in poverty reduction made in Asia,’ Rhee said in a statement. Domestic food inflation in developing Asian nations hit 10 per cent at the start of this year, with double-digit rises in the price of wheat, corn, sugar, edible oils, dairy products and meat, the Manila-based institution said. If this rate continues, as is likely, 64 million people in developing Asia could be pushed into extreme poverty and economic growth could be reduced by up to 1.5 percentage points this year, the bank warned. Vietnam has been one of the hardest hit nations in terms of rice inflation, despite being a major exporter, according to the ADB. It has seen domestic rice retail prices shoot up 36.7 per cent since June last year, while Indonesia and Sri Lanka have endured increases of least 21 per cent. China recorded rice price rises of 12.6 per cent, near the average for developing Asia. Wheat price increases were most severe in Kyrgyzstan, with a jump of 67 per cent since June last year, and Bangladesh, 50 per cent, according to the ADB. Wheat prices spiked by about a third in Sri Lanka, Mongolia and Tajikistan. On a positive note, the bank said there was ample room to improve rice and wheat yields, with the world’s top 10 rice producers averaging just 4.074 tonnes per hectare (2.47 acres) compared with top performing Egypt’s 9.883 tonnes.