Oil prices ended mixed on Tuesday while base metals enjoyed a broad advance and gold regained the $920 level as dollar weakness helped commodity markets stage a recovery.
Tim Geithner, US Treasury secretary, said aggressive efforts by policymakers to counter the global financial crisis were starting to work. "The force of the global recession is receding," said Mr Geithner, in Saudi Arabia.
"For the first time in several quarters, the IMF and a range of private analysts are starting to revise up their forecasts for growth in the second half of this year and next."
In his first trip to the Middle East since taking office, Mr Geithner said US policies were "designed to lay the conditions for a strong dollar".
Ashley Davies, currencies analyst at UBS, said correlations between oil and gold and the dollar had increased in the past few months. "In both commodities, the link between a weaker dollar and higher prices has strengthened."
UBS said the increased correlation made sense because the prospects of dollar weakness had spurred inflows into commodity markets. However, it remained to be seen how well the correlations would hold if the dollar regained ground.
In energy markets, Nymex August West Texas Intermediate reached a session high of $61.46 but later traded 25 cents lower at $59.43 a barrel while ICE August Brent gained 12 cents at $60.81 a barrel.
Base metals moved higher amid hopes for an improvement in the Chinese economy. Gross domestic product data, due out on Thursday, are expected to show growth rising from 6.1 per cent in the first quarter to 7.5 per cent in the second quarter, helped by the government's stimulus plans and efforts to increase bank lending.
Analysts said the data should shed light on how much of the recent surge in imports was going into real consumption rather than accumulating in warehouse stockpiles.
Copper breached the $5,000-a-tonne mark, rising 3.7 per cent to $5,075, helped by short covering ahead of options expiry on Wednesday. The favourable arbitrage opportunity between London Metal Exchange and Chinese copper prices has reopened, which could draw more metal from LME warehouses where copper stocks, at just over 250,000 tonnes, were sufficient for just five days of global consumption.
Aluminium added 2.8 per cent at $1,605 a tonne, shrugging off a further increase of 12,125 tonnes in LME stocks, which stand at a record above 4.4m tonnes.
Nickel gained 5.6 per cent to $15,550 a tonne, finding support on supply concerns after workers at the Sudbury nickel mine in Canada went on strike on Sunday. Sudbury, which is owned by Vale Inco, the nickel mining and processing division of Brazil's CVRD, is one of the world's largest nickel mines.
Miners at the Voisey's Bay nickel-copper mine, also owned by Vale Inco, have voted to go on strike by the end of this month. Both mines are among the world's 10 largest nickel-producing sites, but traders said the strikes would have a limited impact initially because most operations were suspended because of weak demand.
Traders said nickel's push above the $15,000 a tonne level which also took the price above its 30-day moving average had attracted more technical buying by short-term momentum players.
In Chicago, soyabean prices remained under pressure with CBOT July soyabeans down 17½ cents at $10.74 a bushel
Lewis Hagedorn of JP Morgan said that despite the decline in prices witnessed since late June, the market continued to face extremely tight supplies and needed to ration demand before the new crop became available in September. JP Morgan said demand would need to fall "precipitously" in July and August to meet the USDA's current full-season demand forecast and said there were upside risks for CBOT August soyabeans, up 16 cents at $10.34½.
CBOT July corn lost 9 cents at $3.50 a bushel and CBOT July wheat slipped 14 cents to $5.01¾ a bushel.
Gold firmed 0.5 per cent at $924.80 a troy ounce, helped by dollar weakness and the better tone for other commodity markets.
