By Jack Farchy
Published: May 24 2010 11:02 | Last updated: May 24 2010 11:02
Gold reversed five days of losses on Monday to regain some upward momentum as the previous week’s panic dissipated and commodities saw gains across the board.
Analysts said the tentative return to risk across global markets was behind the rebound.
Tom Pawlicki, analyst at MF Global, the brokerage, said precious metals “should benefit from a drop in fear as a recovery in stocks causes inflation expectations to grow again”.
Gold gained 1.1 per cent to $1,188.05 a troy ounce by mid-morning in London. That is still a distance short of the all-time nominal high of $1,248.95 it set ten days ago, but is nonetheless a historically elevated level, only breached during the recent spike and on a handful of days in November-December last year.
Other precious metals, which suffered heavy losses the previous week, also bounced. Palladium was 4 per cent stronger at $457.6 and silver gained 1.6 per cent to $1,792.0.
Oil inched higher, following a large sell-off the previous week. In morning trade, Nymex WTI was 0.1 per cent higher at $70.16 a barrel.
Mr Pawlicki at MF Global said: “We believe that as traders get to a more ‘neutral’ positioning and when risk markets price in too much Armageddon, that oil prices will be able to make a recovery.”
Base metals also made progress as worries eased over economic growth in the context of looming austerity measures in western markets and moves to curb Chinese property markets. Copper was 0.6 per cent higher at $6,860. Zinc rose 1.1 per cent to $1,915.0, while lead gained 1.6 per cent to $1.825.1.
