By Chris Flood
Published: March 16 2010 14:00 | Last updated: March 16 2010 14:00
Crude oil rose while gold was firmer, bolstered by renewed dollar weakness ahead of the latest meeting of the US Federal Reserve on Tuesday.
In energy markets, Nymex April West Texas Intermediate rose 50 cents to $8.300 a barrel while ICE April Brent gained 61 cents to $78.50 a barrel.
The Opec meeting in Vienna this week is expected to see the oil producers’ group reiterate the need for greater compliance by its members with existing production quotas.
Compliance has slipped to about 53 per cent from more than 80 per cent a year ago.
Opec ministers arriving for this week’s meeting have played down the prospect of any supply changes.
Gold traded at $1,118 a troy ounce after ending Monday’ session in New York at $1,108.60.
James Steel, precious metals analyst at HSBC, said economic developments in China were exerting a greater influence on gold.
Noting that Chinese policymakers have identified inflation as their number one concern and as a potential threat to social stability, HSBC said an initial increase to China’s interest rates was likely in the second quarter of 2010.
Mr Steel said that Chinese monetary tightening, although supportive for gold, was already largely factored into bullion prices.
HSBC also said that China’s insistence that the renminbi was not undervalued, contrary to the views of the US government, was supportive for gold prices insofar as this suggested US-Sino currency frictions.
Sugar prices remained under pressure following a pounding last week.
ICE May raw sugar slipped 0.7 per cent cent to 19.25 cents a pound while Liffe May white sugar was fractionally firmer at $541.3 a tonne.
Base metals moved higher with copper up 1.8 per cent to $7,430 a tonne while aluminium added 1 per cent at $2,252 a tonne.
Copper traders continued to monitor developments in Chile, the world’s largest producer, where much of the country was left without power supplies on Sunday evening following the massive earthquake that hit two weeks ago.
The earthquake was the seventh largest recorded and powerful aftershocks have followed.
The country’s copper mining industry appears to have escaped undamaged but there has been widespread damage to ports and transport infrastructure.
“Most copper mines are up and running again but quite a number of construction and other workers have left the mines to check on their families and help reconstruction,” said John Meyer, analyst at Fairfax. “Realistically, this is going to delay construction and expansion plans for a number of companies and will limit some miners in their activities for some time.”
Mr Meyer said such a huge earthquake would be devastating for any country on a number of levels and Chile’s copper industry should not be expected to immediately return to normal following these events.
