Gold extended its retreat for a third session on Wednesday, dropping towards the $950 level, while oil prices moved higher ahead of the latest US weekly inventories data. Base metals rose, helped by gains for equity markets which led to a modest improvement in risk aversion.
Gold sank to $954.20 a troy ounce, trading between a low of $952.30 and a high of $966.35, after ending trading in New York on Tuesday at $963.15.
Ben Bernanke’s comments in testimony to Congress on Tuesday that recession in the US economy could end this year led to profit taking in gold.
Evidence that inflows into gold exchange traded funds have slowed has also led to pressure on gold prices. Signs that inflows to Congress on Tuesday provided comfort to investors on the outlook for inflation and prospects for a recovery in the US financial system.
In energy markets, oil prices rose with ICE April Brent up 23 cents to $42.73 a barrel while Nymex April West Texas Intermediate rose 47 cents to $40.43 a barrel.
Traders will look for further evidence of a recovery in demand in US inventories data, due out later in the session.
US crude stocks were expected to have risen 1.4m barrels last week, according to a poll of analysts by Reuters, while gasoline inventories were seen falling 100,00 barrels and distillate stocks (including heating oil) were forecast to drop 1.3m barrels.
Crude stocks at Cushing, Oklahoma, the delivery point for WTI will be of huge interest to traders. Last week’s report from the US government showed Cushing stocks were unchanged at 34.2m barrels, confounding the market forecast for a rise. This led to a massive spike in the WTI price which rose 14 per cent on Feb 19 as traders rushed to close short positions.
Refinery utilisation was expected to dip 0.1 percentage points to 82.2 per cent and traders will also pay attention to imports data as another figure below the 9m barrels a day mark would provide more evidence that supply cuts by Opec are tightening the market.
