Oil prices staged a rebound on Tuesday after a sharp fall in the previous session while base metals managed a modest recovery but gold retreated below the $930 level. Risk aversion remained at elevated levels due to renewed weakness across global equity markets.
ICE April Brent rose 92 cents to $42.13 a barrel, moving between a low of $41.60 and a high of $43.40.
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On Monday, Brent dropped $4.41, or 8.9 per cent to $42.21, after the widely watched purchasing managers’ surveys confirmed that manufacturing remained mired in recession in the US, the UK and Europe, underlining concerns about demand prospects for commodities.
“Heavy losses on equity markets are fuelling concerns about the economy and therefore weak demand,” said analysts at Commezbank:. “In the near-term, the risk of a further fall in prices prevails.”
Nymex April West Texas Intermediate rallied 64 cents to $40.78 a barrel, moving between a low of $39.44 and a high of $41.05.
Gold continued its correction, trading at $925 a troy ounce, moving between a low of $921.55 and a high of $932.30, after ending trading in New York on Monday at $925.65.
Gold prices have come under pressure because investor inflows into gold exchange traded funds (ETF) have stalled, leading to uncertainty about the market’s outlook as other demand drivers, jewellery consumption and industrial usage remain weak.
Traders said that the sharp fall in stock markets on Monday may have forced some hedge funds to close long gold positions in order to pay for higher equity margin calls.
Among the base metals, copper rose 3.7 per cent to $3,500 a tonne, helped by a fall of 5,8000 tonnes in London Metal Exchange stocks while aluminium added 1.4 per cent at $1,334.75 a tonne, shrugging off a rise of 17,200 tonnes in LME stocks.
