Oil prices fell on Wednesday while base metals weakened and gold consolidated as investors continued to assess the latest moves by policymakers to address the global financial crisis.
In energy markets, traders looked forward to the latest US weekly inventories data which was expected to show a rise of 1.2m barrels in US crude stocks following a rise in imports and a small dip in refinery utilisation.
ICE May Brent fell $1.04 to $52.46 a barrel while Nymex May West Texas Intermediate lost $1.08 at $52.90 a barrel.
Traders will also keep an eye on crude stocks at Cushing, Oklahoma, the delivery point for WTI with a small drop expected due to reduced supplies from Canada.
US gasoline stocks were seen falling 600,00 barrels last week while distillate stocks (including heating oil) were expected to have increased 200,000 barrels, according to a poll of analysts by Reuters.
Nymex April RBOB unleaded gasoline dipped just under 2 cents, or 1.3 per cent, to $1.4829 a gallon while Nymex April heating oil lost 2.7 cents, or 1.8 per cent, at $1.4730 a gallon.
Refinery utilisation was forecast to dip 0.1 percentage points to 82 per cent, due to seasonal maintenance programmes, while imports were seen rising further beyond the 9.2m barrels a day level.
Gold traded at $920 a troy ounce, moving in a range between a low of $919.55 and a high of $930.75, after ending trading in New York on Tuesday at $925.65.
The SPDR Gold Trust, the largest physically backed exchange traded fund reported a rise of of 10.7 tonnes in its gold holdings to 1,125 tonnes on Tuesday, suggesting that investor interest remains intact following the announcement of the new US government plans to clean up the banking system.
The Federal Reserve is also expected to start buying US Treasuries today.
“It is clear that the latest measures by the Fed and the US government will inflate the money supply massively, which should be positive for gold prices in the medium to long term,” said analysts at Commerzbank: “Consequently, investors are being rational in viewing temporary price falls as opportunities to buy (gold).”
However, Commerzbank also cautioned that the possibility of gold prices sliding towards $900 could not be ruled out if the US dollar were to continue its recovery.
CPM Group said it expected investor demand for gold to rise by more than a fifth this year with an increase of 20.7 per cent to 52.3m ounce, a record high.
CPM said continued volatile and weak financial and economic conditions would continue to be supportive of strong investment demand for gold this year.
In its annual outlook report, the consultancy also predicted that weaker consumer spending would lead demand for gold jewellery to drop 7.1 per cent to 56.5m ounces.
“Investors are concerned about the preservation of the value of their assets amid the massive destruction of wealth over the past year, said CPM: “Not since the Great Depression and World War Two has sentiment about the state of financial and economic conditions been so pessimistic.”
