BD: Oil and gold rise as US dollar's slide continues
OIL rose above $US80 a barrel for the first time since last October in New York early yesterday while gold traded near a one-year high as the US dollar slipped to a 14-month low against the euro, adding to the investment appeal of commodities.
The US dollar index, which measures the greenback against six major currencies, fell to its lowest since August last year, declining 0.4 per cent to 75.25 points last night. Other commodities also posted gains, with copper making a six-week high in Shanghai, rubber advancing to the most in a year and corn reaching its highest in three months.
Strong commodities helped to push the Australian sharemarket higher, with the benchmark S&P/ASX 200 index climbing 53.4 points, or 1.11 per cent, to 4846.2.
Crude oil for November delivery rose as much as US44¢, or 0.6 per cent, to $US80.05 a barrel in electronic trading on the New York Mercantile Exchange, the first time the front-month contract has traded above $US80 since October 14 last year. Gold for immediate delivery was down 0.2 per cent at $US1062.46.
In US trading early yesterday, oil advanced 1.4 per cent while gold rose 1.1 per cent as US equities climbed on better than estimated earnings and speculation that the economy was healthy enough for policymakers to unwind efforts to shore up the financial system.
Hedge funds and other large speculators hold their most bullish position ever in futures, helping to propel gold's gains for the year to 21 per cent as a weaker dollar and rising government debt spur concern that inflation may accelerate. Spot gold touched a record high of $US1070.80 last Wednesday.
''There are long positions building up,'' said Darren Heathcote, head of trading at Investec Bank in Sydney. ''There's a pretty good reason for it as we continue to see the US dollar weaken daily. The market is becoming more comfortable with diversification and more people are looking to get gold.''
According to technical analysis by ANZ, crude oil could rise to $US89.95 a barrel now that it has breached a key resistance level of $US76.28 a barrel.
