LONDON, Sept 22: Commodity markets were higher on Friday, with oil up nearly one per cent and base and precious metals also firmer, lifted by a weaker dollar, analysts said.
The dollar was around two-week lows against the yen and the euro after data from the Philadelphia Federal Reserve's business activity survey showed its first negative reading in over three years on Thursday.
A weaker dollar supports commodities, making them cheaper for holders of other currencies.
If the dollar falls (further) we could see a trading bounce. In the longer term, people expect base metals to moderate but we have seen a significant rebound in gold and other precious metals, ABN AMRO commodities analyst Nick Moore said.
Gold looks particularly strong. In the medium term we have the seasonal retail buying spree and a fresh assault on $600 (an ounce) appears likely. Spot bullion was quoted at $591.00/593.00, up from $582.30/583.30 late in New York on Thursday. Gold earlier jumped 1.8 per cent to its highest in a week at $592.50.
New York crude oil futures were up 54 cents at $62.05 a barrel, while Brent crude gained 47 cents at $61.81. Oil has tumbled more than 20 per cent since early August, raising expectations that Opec, which decided two weeks ago to maintain production for the time being, will curb output to limit further losses.
You have had a very big sell-off. Continued downside momentum would require a continued flow of bad news, which I don't think we are going to get, said Michael Coleman, a partner with Singapore-based hedge fund Aisling Analytics.
We think prices have got potential to stabilise and consolidate.” Base metals rose with low stocks and worries about supply disruptions in upcoming wage negotiations adding to support from the dollar.
But sentiment was undermined by worries that global economic growth could slow sharply and market fears that large losses at US-based hedge fund Amaranth Advisors could trigger further commodity sell-offs.
Copper for three-month delivery was quoted up at $7,695 a ton on the London Metal Exchange from Thursday's close at $7,560.—Reuters