Oil, gold prices bounce on safe haven status

LONDON (AFP) - Oil and gold prices bounced higher this week as investors sought a safe haven while other commodities fell on fears that the financial crisis could sap global economic growth and dent demand.

However, profit-taking was in evidence Friday as world stock markets soared, driven by hefty gains in the banking sector after the US government announced plans to cordon off the debt and toxic investments at the heart of the global credit crunch.

OIL: Oil prices jumped briefly above 103 dollars per barrel before pulling back on profit-taking after an extremely volatile five days for the financial markets.

After slumping below 90 dollars at the start of the week, crude prices then jumped back into three figures. “The market got oversold ... reacting to all this bad financial news,� said Victor Shum of international energy consultancy Purvin and Gertz.

Oil, like gold, is seen as a safe haven investment in times of economic turmoil.

Prices jumped about six dollars on Wednesday after the US government’s 85-billion-dollar bailout of insurance giant AIG failed to reassure skittish investors and prompted a rush into commodities as a safe haven from the financial market storm.

On Tuesday, prices had struck seven-month lows under 90 dollars as the turmoil sparked worries about the prospect of a further drop in energy demand, traders said. OPEC this week cut its world oil demand growth forecast for 2008 to 1.02 percent from 1.17 percent previously, in the face of falling demand already occurring in the United States, the world’s biggest energy consumer. Further unrest in Nigeria, Africa’s second largest oil producer after Angola, provided support. The main militant group in southern Nigeria â€" the Movement for the Emancipation of the Niger Delta (MEND) â€" said it had destroyed a major oil pipeline belonging to Royal Dutch Shell. The attack is the fifth on a Shell facility in Rivers State, the centre of Nigeria’s oil industry, in the space of a week.