Gold surged towards the US$ 800 level on high oil prices and a weak dollar and the yellow metal looks likely to climb further on strong physical demand, traders said. Silver moved in parallel to gold and rose to as high as US$ 14 an ounce, its highest level in six months. Lead prices continued a record-breaking run with the three-month price spiking above US$ 3,800 a ton. The market has suffered supply disruptions in the approach to a period of strong for demand from battery makers.

High demand and record prices for commodities have pushed up international freight rates. The Baltic Dry index, a composite index of shipping costs for dry bulk materials, hit a record of more than 11,000 points for the first time. The index was bolstered by demand for iron ore and coal from

China and a jump in US cereal exports to the Asia-Pacific region. Freight costs have risen fivefold since 2003. Congestion at ports in Australia and Brazil, important exports of raw materials to China, have increased and are contributing to the tightness of the shipping market.
US consumers continued to spend despite a worsening downturn in the housing market as retail sales rose an estimated 0.6 percent in September.
 
US exports hit records and helped to drive down the trade deficit for the world’s largest economy amid strong demand from Europe and Asia. The trade gap narrowed in August to $ 57.6 billion from US$ 59 billion.
 
The eurozone industrial production rose 1.2 percent in August from a 0.7 percent increase in July 2007.
 
In China, the economy grew at an annual rate of 11.5 percent in the third quarter on the back of robust investment and exports, only marginally slower than the 11.9 percent rate seen in the second quarter.
 
Japan ’s trade surplus surged to a record high in September. It expanded 63 percent from a year earlier to US$ 14 billion.

In London, the Lead cash settlement price was US$ 3,691 per ton while the Zinc cash settlement price was US$ 2,795.50 per ton on October 31, 2007. 

Lead prices hit new records on rising demand from battery manufacturers approaching winter and critically low global inventories. Though prices have come under pressure from stock inflows recently, the analysts remain bullish and expect further price gains on tight fundamentals.
 
The lead market widened its supply deficit in the first eight months of 2007 as increased production of the refined metal failed to keep pace with strong Chinese demand, the ILZSG said. The market recorded a deficit of some 84,000 tons in the January to August period.
  Zinifex and Umicore have agreed to sell 70 percent of their holding in smelting business Nyrstar through an initial public offer on the Eurolist of Euronext Brussels. Nyrstar was created in September 2007 after Zinifex of Australia merged its zinc and lead smelting division with the assets of Belgium’s Umicore. Nyrstar became the world’s largest zinc producer producing 10 percent of the world’s zinc. On a pro-forma basis, the company produces 543,000 tons of zinc and 116,000 tons of lead in the first half of 2007.

In London, the Copper settlement price was US$ 7,761 a ton with a backwardation of US$ 1 on October 31, 2007. 

Recent increases in LME stocks of copper fuelled concerns about the impact on copper demand from the US economic slowdown as a result of the credit squeeze and housing market weakness. The metal is widely used in the construction industry for pipes and wiring. But most analysts felt that imports and mounting demand from China, key consumer, are expected to more than compensate for the drop in US demand. According to Chinese customs authorities, copper imports more than doubled during the first nine months of 2007. China’s imports of refined copper were over 100,000 tons in September 2007.
 
The ICSG projected the global copper market would have a supply surplus of 110,000 tons this year, rising to 250,000 tons in 2008. Global refined output is expected to rise 4.4 percent to 18.12m tons in 2007 and 4.6 percent to 18.95m tons in 2008. demand growth is expected to be concentrated in China, India and Russia this year while copper usage in the US, EU and Japan is forecast to fall. Global copper usage is projected to rise 5.2 percent to 18m tons in 2007 with the pace of expansion slowing to 3.8 percent in 2008.
 
The 150,00 tons per year refined copper smelter being constructed at Chambishi on the Zambian Copperbelt will be completed in December 2008, with full production starting in January 2009.

In London, the tin settlement price was US$ 16,675 per ton with a contango of US$ 80 on October 31, 2007. 
 
Australia ’s Metals X, formerly known as Bluestone Tin, announced that it will reopen its Renison tin and copper mine in Tasmania in 2008. The project was placed on care and maintenance in October 2005 as tin prices collapsed to less than US$ 6,000 a ton. Renison is expected to produce about 8,500 tons per year of tin metal with a blended feedstock from both underground mining at Renison and open-pit mining at Mt. Bischoff.
 
Singapore Tin Industries (STI) will produce at less than half of 2006’s annualised rate due to difficulties in procuring raw materials from Bangka island. The company is expecting tin production at 6,000-7,000 tons this year, compared with output of 8,738 tons in the second half of 2006.
 
PT Timah, Indonesia’s biggest tin producer, has proposed that the country exports 90,000 tons of tin next year - with 45,000 tons to be exported by Timah, aiming to stabilise prices at about US$ 15,000 a ton.

In London, the Gold AM fixing was US$     783 per ounce and spot Silver traded at US$ 14.32 per ounce on October 31, 2007.
 
Gold hit a new 28-year high as fears of rocketing oil prices leading to renewed inflation pressures increased the metal’s safe-haven appeal.   A weakening US dollar, record oil prices and a worsening geopolitical landscape are all likely to continue to keep sentiment and prices well supported. Speculators have built a record long position in gold   in New York, betting on further price gains. Meanwhile, possible strike action in South Africa at the end of October has added to concerns over an already tightly supplied gold market.
 
Jewellery demand rose by 23 percent in the first half of the year, compared to the same period in 2006, led by India, China and the Middle East, which were up 77 percent, 21 percent and 16 percent respectively.
 
China ’s gold industry is flourishing, with first half 2007 gold output hitting a record high.
According to statistics released by the China Gold Association, total output rose 15.5 percent in terms of tonnage to 122.45 tons in the first nine months of 2007, and was up 43.8 percent in terms of value to US$ 4.2 billion on the corresponding period last year.

In London, Nickel traded at US$ 30,900 per ton, equivalent to US$ 14.02 per pound on October 31, 2007. Cobalt min. 99.8% traded at US$ 30.50 per pound and Cobalt min. 99.3% at US$ 30.50 per pound on October 31, 2007. 
 
Swiss miner Xstrata has approved the development of the US$ 3.8 billion Koniambo project , a major long-life, low cost, open pit nickel mine located in New Caledonia. Koniambo will be among the world’s lowest cost producers of nickel with initial annual production of 60,000 tons of nickel in ferronickel per annum. First ore is expected to be processed in the first half of 2011, ramping up to steady state production in 2013.
Xstrata has also launched a US$ 2.9 billion recommended bid for Australian nickel sulphide miner Jubilee Mines, which is known for the quality of its nickel concentrates and for having one of the world’s lowest nickel cash cost.
 
Jinchuan Group, China’s largest nickel producer, is preparing to carry out an initial public offering in the near future. The IPO is expected to help Jinchuan raise more funds for the company’s mineral resource development projects. The company has a current annual production capacity of 150,000 tons of nickel, 10,000 tons of cobalt and 400,000 tons of copper.
 
Cobalt availability remained constant in the first half of the year despite big declines in output at Chambishi Metals and Xstrata, according to the Cobalt Development Institute (CDI). Cobalt rose to 26,442 tons from 26,424 tons in the first half of 2006. Availability remained restrained due to the moratorium on the export of raw materials from the Democratic Republic of Congo and demand in China, the global commodity and investment driver, remains buoyant.