Gold regained the $1,000 an ounce mark on Friday as further weakness in the dollar boosted sentiment towards commodity markets.
Gold traded in a narrow range between a low of $995.20 and a high of $1,002.70 after ending trading in New York on Thursday at $995.50.
Gold prices took their lead from fluctuations in the dollar, with the US currency’s trade-weighted exchange rate index sinking to a fresh one-year low.
Among the base metals, copper shrugged off early weakness and rose to $6,312 a tonne in spite of an unexpectedly big rise in copper inventories in China, up 12 per cent to 97.396 tonnes, the highest level for more than two year.
China imported substantial volumes of copper in the first half of the year and traders have warned that the restocking process was likely to slow in the second half.
Lead prices steadied after a sharp fall in the previous session. Lead lost 0.8 per cent at $2,098 a tonne after dropping 12 per cent on Thursday.
Lead hit $2,511 on Tuesday, up 151 per cent this year, after a number of Chinese smelters were forced to close following reports that hundreds of children had been affected by lead poisoning.
However, Antaike, the state-backed Chinese research group, said production lost from smelter closures would amount to 60,000 tonnes, less than 2 per cent of national production. Stocks of lead in London Metal Exchange warehouses and Shanghai remain high and, before the latest price correction, some dealers had warned that China’s lead industry had substantial spare capacity.
Antaike said China would produce 3.14m tonnes of lead this year, while consumption was estimated at 2.87m tonnes, implying an expected surplus of about 270,000 tonnes.
Crude oil prices dipped, with Nymex October West Texas Intermediate oil down 10 cents to $71.84 a barrel, while ICE October Brent lost 6 cents at $69.80 a barrel.
At this week’s Opec meeting, the cartel said it would keep its production quota unchanged. The decision had been widely anticipated and had little impact.
On Thursday, the International Energy Agency increased its demand forecasts for 2009 and 2010.
The energy watchdog forecast a drop of 1.9m barrels a day in global oil demand this year, compared with the 2.3m b/d decline previously anticipated.
The IEA said it expected demand to rise from 84.4m b/d this year to 85.7m b/d in 2010, an increase of 1.5 per cent, or 1.3m b/d.
The IEA warned that the outlook for the winter heating season remained uncertain as middle distillate markets (heating oil and diesel) remained weak with 60m barrels being held in floating storage tankers, mainly off Europe.
“Indeed, the persistent weakness of heating oil and diesel [demand] calls into question the depth and durability of fledgling industrial recovery,” the IEA said.
Sugar prices rose, recovering after a correction in the previous week. ICE October raw sugar gained 1.8 per cent at $22.18 and Liffe October white sugar increased 2.4 per cent to $552 a tonne.
In electronic trading in Chicago, US agricultural commodities were mixed ahead of an update on production forecasts from the US Department of Agriculture, due on Friday.
September corn was flat on the Chicago Board of Trade at $3.09¼ a bushel, while CBOT September soyabeans slipped 4¼ cents to $9.66¼ a bushel. CBOT September wheat added 3¾ cents to $4.23¾ a bushel.
Good growing conditions this year mean US farmers remain on course to produce bumper crops of corn and soyabeans in 2008-09. Traders are waiting to see if the USDA’s updated projections will match the increasingly optimistic forecasts that have been produced recently by analysts.
In August, the USDA said it expected US farmers to produce 12.716bn bushels of corn this year but the consensus forecast among analysts has risen to 12.901bn bushels, an increase of 6.6 per cent on the previous season.
In August, the USDA forecast the soyabean crop at 3.199bn bushels, a record, but an even higher total is now expected by analysts after several weeks of favourable weather. The consensus forecast from analysts surveyed by Reuters was for soyabean output to reach 3.249bn bushels, up 9.8 per cent compared with the previous season.
US wheat prices have fallen sharply since June, down about 36 per cent, amid expectations that global supplies will be plentiful this year.
In Australia, recent rains have saved parched crops in the north-eastern grain belt and the country remains on course to produce 22m tonnes of wheat this year, its largest harvest for four years, according to Tony Burke, Australia’s agriculture minister.
Australia is the world’s fourth-largest wheat exporter but production in recent years has been badly affected by drought. However, Mr Burke said that growing conditions in Western Australia, the top exporting state, were very good and that the south-eastern state of Victoria was likely to produce an average crop after a long stretch of poor harvests.
