Oil, Copper Pause from Sharp Fall, Outlook Shaky
LONDON - Oil moved into positive territory after falling below $67 a barrel, while a weak dollar lifted copper and gold from their lows, but investor jitters on the global economic outlook left some prices on shaky ground.
After showing some vulnerability to a broader sell-off in commodities during Asian trade earlier, gold prices were sustained as dollar weakness combined with its traditional role as a hedge against jittery sentiment in other asset classes.
The picture on industrial metals and crude was less clear, as doubts crept in about how sustainable recent strong rallies were looking, with a reassessment of share price gains and the global economic outlook fanning worries about potential demand.
“What people are concerned about now is was the rally a true growth story or was it a temporary re-stocking?” said Kona Haque, commodities strategist with Macquarie Group.
The World Bank said on Monday prospects for the global economy remained “unusually uncertain” as it cut 2009 growth forecasts for most economies.
“The World Bank report did not make it any easier...There’s a lot of doubt there and speculators have been a little bit less pro-risk,” Haque said.
U.S. crude was last up 50 cents at $68.04 per barrel, having earlier fallen below $67.
“The stock markets and global economic outlook pushed oil through key support levels but they (prices) now seem to be finding support,” said Christopher Bellew, a broker at Bache Commodities.
The dollar fell 0.7 percent against a basket of major currencies ahead of the Federal Reserve’s policy meeting later in the day, with concerns about reserve diversification away from the U.S. currency also weighing.
Shaky ground
Copper prices firmed after falling more than 5 percent on Monday with three months metal trading at $4,845 a tonne, up from $4,761 on Monday.
“Sentiment is a little bit fragile. People want to be sure economic growth is on the rebound but the data has not been uniformly strong,” said Citi base metals analyst David Thurtell.
Copper prices have more than doubled on the year as a surge of buying from China and an improving economic outlook had helped the metal used in power and construction to recover from a slump in the second half of 2008.
On the corporate front, South Africa’s mining minister said the government was opposed to a possible merger between Xstrata and Anglo American Plc, calling such a move unacceptable.
Gold touched a six-week low before rallying, with spot metal moving into positive territory at $923.75, up from $921.90 quoted late in New York on Monday. It hit a six-week low of $912.90 in Asian trade.
“All eyes are on whether the dollar is going to be subject to a fresh selling wave. The only source I see for that would be if the Fed gets more vocal in communicating on the next batch of Treasury buying,” said Ashraf Laidi, analyst with CMC Markets.
“Anything short of that, will remain neutral or positive for gold.”
Grains and oilseed prices also firmed. Chicago Board of Trade soybeans for July delivery rose 1.13 percent to $11.64-1/2 a bushel while July corn gained 0.1 percent $3.85-1/2 a bushel. Wheat for July delivery rose 0.7 percent to $5.49-3/4 a bushel.
Major crop-growing regions in the United States are set for warm, dry weather in the week ahead, which would boost young spring plantings and help the harvesting of winter wheat.
After showing some vulnerability to a broader sell-off in commodities during Asian trade earlier, gold prices were sustained as dollar weakness combined with its traditional role as a hedge against jittery sentiment in other asset classes.
The picture on industrial metals and crude was less clear, as doubts crept in about how sustainable recent strong rallies were looking, with a reassessment of share price gains and the global economic outlook fanning worries about potential demand.
“What people are concerned about now is was the rally a true growth story or was it a temporary re-stocking?” said Kona Haque, commodities strategist with Macquarie Group.
The World Bank said on Monday prospects for the global economy remained “unusually uncertain” as it cut 2009 growth forecasts for most economies.
“The World Bank report did not make it any easier...There’s a lot of doubt there and speculators have been a little bit less pro-risk,” Haque said.
U.S. crude was last up 50 cents at $68.04 per barrel, having earlier fallen below $67.
“The stock markets and global economic outlook pushed oil through key support levels but they (prices) now seem to be finding support,” said Christopher Bellew, a broker at Bache Commodities.
The dollar fell 0.7 percent against a basket of major currencies ahead of the Federal Reserve’s policy meeting later in the day, with concerns about reserve diversification away from the U.S. currency also weighing.
Shaky ground
Copper prices firmed after falling more than 5 percent on Monday with three months metal trading at $4,845 a tonne, up from $4,761 on Monday.
“Sentiment is a little bit fragile. People want to be sure economic growth is on the rebound but the data has not been uniformly strong,” said Citi base metals analyst David Thurtell.
Copper prices have more than doubled on the year as a surge of buying from China and an improving economic outlook had helped the metal used in power and construction to recover from a slump in the second half of 2008.
On the corporate front, South Africa’s mining minister said the government was opposed to a possible merger between Xstrata and Anglo American Plc, calling such a move unacceptable.
Gold touched a six-week low before rallying, with spot metal moving into positive territory at $923.75, up from $921.90 quoted late in New York on Monday. It hit a six-week low of $912.90 in Asian trade.
“All eyes are on whether the dollar is going to be subject to a fresh selling wave. The only source I see for that would be if the Fed gets more vocal in communicating on the next batch of Treasury buying,” said Ashraf Laidi, analyst with CMC Markets.
“Anything short of that, will remain neutral or positive for gold.”
Grains and oilseed prices also firmed. Chicago Board of Trade soybeans for July delivery rose 1.13 percent to $11.64-1/2 a bushel while July corn gained 0.1 percent $3.85-1/2 a bushel. Wheat for July delivery rose 0.7 percent to $5.49-3/4 a bushel.
Major crop-growing regions in the United States are set for warm, dry weather in the week ahead, which would boost young spring plantings and help the harvesting of winter wheat.
quoted from: Khaleej Times
