NEW YORK: Brent crude oil returned to above $100 a barrel on Monday and gold rallied its most since last week's historic drop but copper remained below a level critical to market bulls, underscoring the economic uncertainty hanging over commodities.
Grains from corn to wheat and soybeans all fell roughly 1 percent each on forecasts for better crop weather across a broad swath of the soggy US crop belt.
Among other crops, cocoa retreated from a four-month high, posting its largest daily loss in a month on profit-taking. Sugar also fell, pressured by accelerated harvesting in top producing country Brazil.
The 19-commodity Thomson Reuters-Jefferies CRB index was down slightly, with 12 of its 19 components in negative territory.
The CRB hit a nine-month low on Wednesday as investors fled from commodities on fears of stalling China growth, threat of fresh euro zone troubles and uncertainty whether the US Federal Reserve would continue without slowing bond purchases that had fueled over two years price growth in raw materials.
The Chicago Federal Reserve reinforced worries about US economic growth after issuing on Monday a negative reading on a national activity index that investors had expected to come in positive.
News of disappointing corporate earnings and lower-than-expected existing home sales in the world's top economy also caused markets to give back part of their gains for the day.
Investor hesitation was particularly palpable in oil, where prices gained along with equities, but had difficulty holding on to their peaks due to worryingly high stockpiles of US crude.
"There's still a sense of trepidation with regard to demand, especially with supplies what they are," said Stephen Schork, editor of energy news letter The Schork Report.
"We seem to have a lot of inventory and questionable demand, and that's hanging over the market."
London's Brent crude settled up 74 cents, or 0.7 percent, at $100.39 a barrel. It had risen to a session high of $101.04.
US crude ended the day at $88.76 a barrel, up 75 cents or 0.9 percent.
Gold rose more than 2 percent, supported by strong physical buying that helped it pull away from last week's two-year low.
Despite the rebound, the technical outlook for gold barely improved with bullion prices remaining down more than 15 percent on the year.
Investors also reduced bullion holdings in the top exchange-traded fund to the lowest in nearly three years.
"Physical demand is giving the price a psychological boost, but don't think that could make up for the 65-tonne outflows from ETFs last week," Saxo Bank senior manager Ole Hansen said.
"The market is obviously looking for someone to show an interest to buy at these levels but it's quite a traditional set-up that we have a sell-off and then tentative recoveries the following days."
The spot price of gold was up 1.5 percent at around $1,425 an ounce, after a session-high at $1,438.66 per ounce. It hit a two-year low on April 16, after falling more than $125 a day earlier -- its biggest loss in a day in dollar terms.
Copper fell almost 1 percent to trade close to 1-1/2 year lows amid disappointing global growth and higher supply prospects that kept the metal below the $7,000 tonne level critical to market bulls.
Three-month copper on the London Metal Exchange ended at $6,935 a tonne from $6,990 at the close on Friday, having earlier fallen as low as $6,815, just $15 short of a 1-1/2-year low hit last week.
"There has been a focus on copper because it has been trading at a significant premium to its accepted fair value," said Deutsche Bank analyst Daniel Brebner. "Between now and mid-year we will see $6,500 a tonne, but if you're a trader, you'd be looking at this as a (buying) opportunity."
<Center><b><i>Copyright Reuters, 2013</b></i><br></center>
Comments
Comments are closed.