PNG commodities struggle

FRONTIER Resources, the explorer going into hibernation mode, is leading our PNG watchlists this week, which sums up market sentiment as commodities continue to lose value to the US dollar.

US stocks were higher for a third consecutive day and recent Federal Reserve Bank comments indicate that the central bank will not "hastily" end its stimulus measures.

The Australian dollar is struggling to trade above US92.5c this week and key commodities are still losing ground.

Spot gold was at around $US1202.63 an ounce in the past hour - a 7% fall from last Friday's close, with the precious metal falling below the $1200/oz level in trading last night.

Patient and strong-willed contrarian investors might want to start buying into gold stocks that can weather the storm as the ongoing plunge in spot gold prices will inevitably impact the supply side of the equation.

The gold-related blogosphere is also going into fever pitch with claims the physical gold market is disconnecting from the gold paper/futures market due to record spikes in the premiums (an additional charge on top of the spot price) for buying physical gold.

London Metal Exchange cash copper closed at $6726.75 a tonne overnight, a fall of roughly 0.9% from last Friday.

By the same comparison, LME spot nickel closed down 1.6% to just $13,782.50/t.

Singapore Tapis crude, the Asia Pacific benchmark, fell 0.5% from last Friday to $108.66 a barrel overnight.

Frontier, which announced plans to conserve cash and hibernate for the rest of 2013, regained the ground it lost from this news last week as it leads our watchlists this Friday.

Oil Search is down 2% for the week as it suspends its Taza-1 ST2 well in Iraq as a potential future producer, with hydrocarbons observed in the final formation drilled.

Its Hagana-1 well in offshore PNG is the next focus for future drilling reports and was at a depth of 2231m yesterday.

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