Bullions held buoyant as European stock markets turned lower, sparking a flight to safety. Rising oil prices and a softer dollar underpinned gains as commodities took on a firmer tone after recent losses. Gold traders will be eyeing remarks from Federal Reserve chairman Ben Bernanke and a speech in Evian from European Central Bank chief Jean-Claude Trichet later in the session. European Union finance ministers are also meeting in Luxembourg to discuss means of reducing market turbulence. Support for gold prices from the rocky economic situation looks set to remain firm, analysts say, with prices potentially climbing further if the outlook worsens. Physical demand for coins and bars is also strong, while jewellery buying is expected to increase going into the fourth quarter.
Crude Oil climbed above $91 a barrel after a 100 basis point interest rate cut by the Bank of Australia raised hopes that other policymakers would follow suit, potentially boosting the economic outlook and consequently demand for crude. Iran is concerned that the deepening global financial crisis is having a bigger impact on oil demand growth than previously expected, the Islamic Republic's OPEC governor said on Tuesday. It was too early to say if the Organization of the Petroleum Exporting Countries (OPEC) would have to cut production at its December meeting to match lower demand growth, Muhammad Ali Khatibi told Reuters in an interview. Reuters poll of industry analysts showed an average forecast for a 2.3 million barrel increase in crude stocks last week, ahead of Wednesday's U.S. government inventory data.
Base metals prices inched higher as Australia's rate cut boosted hopes for other cuts elsewhere, which could stimulate demand for industrial metals. Copper trimmed gains, however, after a hefty increase in LME-monitored stocks of the red metal. Despite a negative performance this year, copper, aluminum and tin on the London Metal Exchange are the best performing metals with the others; lead, zinc and nickel down by between 35 to 47 percent. Lead climbed to $1,655, tin was unchanged at $16,200 and zinc at $1,545 from $1,549.