By Chris Flood
Published: February 2 2010 11:57 | Last updated: February 2 2010 11:57
US crude oil prices regained the $75-a-barrel level on Tuesday while base metals rallied and gold rose above $1,100 an ounce as commodity markets continued to recover following better-than-expected global manufacturing data, released on Monday.
In energy markets, Nymex March West Texas Intermediate rose 84 cents to $75.27 a barrel while ICE March Brent also gained 84 cents at $73.95 a barrel.
Copper rose 0.5 per cent to $6,860 a tonne while aluminium added 0.7 per cent at $2,105 a tonne, zinc increased 0.4 per cent to $2,170 a tonne.
Lead gained 1.7 per cent to $2,085 a tonne and nickel rose 1.8 per cent to $18,250 a tonne.
Tin rebounded 1.4 per cent to $16,425 a tonne after dropping more than 10 per cent over the previous five sessions.
Gold rose 0.1 per cent to $1,114 a troy ounce after ending Monday’ session in New York at $1,106.95, helped by renewed dollar weakness.
James Steel, precious metals analyst at HSBC, noted that gold jumped after the White House unveiled the 2010 budget, forecasting a record deficit of $1,556bn.
Mr Steel said, however, that it was important not to oversubscribe the influence of the budget deficit on gold prices.
“US national debt (as a percentage of GDP) tended to fall during the Nixon, Ford, and Carter Administrations but gold prices soared,” said Mr Steel: “Conversely, gold prices dropped under Reagan and Bush (senior) as the national debt rose.”
Mr Steel said that gold’s underlying strength was demonstrated by its recent good performance in non-dollar currencies with gold in euro terms remaining firm in the last three trading sessions while dollar-terms gold has been volatile.
“This may indicate that gold is being driven higher for reasons independent of currency fluctuations and augurs well for higher prices,” said Mr Steel: “This also lends support to our contention that physical demand for bullion outside of the US has picked up and is a factor in the recent price rally.”
