Oil prices rose by more than $1 a barrel on Thursday while a jump for copper encouraged a broad rally across the base metals sector.
Among precious metals, gold remained below the $900 an ounce level, continuing its recent consolidation phase, while gains for platinum led palladium prices higher.
In energy markets, Nymex May West Texas Intermediate rose $1.64 to $51.02 a barrel while ICE May Brent added $1.36 at $52.95 a barrel.
Copper pushed above the $4,500 mark, rising 2.8 per cent to $4,505 a tonne, helped by a fall of 7,425 tonnes in London Metal Exchange stocks which have dropped below the 500,000 tonne level.
Copper is moving from the LME’s warehouses into China amid growing optimism that the government’s stimulus package will boost the demand from the power industry, the world’s largest user of the metal. Chinese copper imports have risen strongly in the first two months of this year and China’s State Reserves Bureau is thought to be active in the market, rebuilding the country’s strategic stockpiles. has agreed to add 400,000 tons of refined copper to its stockpiles in the second quarter.
Aluminium rose 1 per cent to $1,505 a tonne while zinc added 1.6 per cent at $1,380 a tonne, lead gained 1.4 per cent at $1,355 a tonne, nickel inched 0.8 per cent higher to $10,990 a tonne and tin increased 1.8 per cent to $11,000 a tonne.
Gold rose to $885 a troy ounce, trading in a narrow range between a low of $879.50 and a high of $886.05, after ending trading in New York on Wednesday at $879.55.
Gold has found support from concerns that inflationary pressures will rise as a consequence of the fiscal and monetary steps, including quantitative easing, taken by governments around the world to counter the global economic crisis.
“Historically, gold prices react not only to changes in inflation but also to the perceived response by monetary authorities to such changes,” said James Steel, precious metals analyst at HSBC: “If investors believe that the monetary authorities will act quickly to contain inflation, gold prices tend to weaken. But if investors have limited confidence that the authorities will act to restrain inflationary pressures, then gold will likely rally.”
Platinum hit the psychological $1,200 a troy ounce mark for the first time since September, rising 2.2 per cent on the day, and encouraging gains for palladium which added 1.1 per cent at $233 a troy ounce. Palladium prices have risen just under 5 per cent in the past two sessions.
Walter de Wet at Standard Bank highlighted the strength of investor inflows into the platinum and palladium exchange traded funds this year and said rumours that new platinum ETFs funds were to be launched in New York and South Africa had added fuel to the fire.
Mr de Wet noted that platinum ETF holdings had risen 51.6 per cent this year to 449,754 at the start of April while palladium ETF holdings had increased by 20.4 per cent to 798,821 ounces.
“The launch of a platinum and palladium ETF in the US could see investment demand rise even more, said Mr de Wet: “Whether the SEC will allow the launch of a platinum and palladium ETF remains uncertain. The market is not as tight as two years ago. However, US auto makers are in much deeper financial trouble.”
