Oil prices inched higher on Tuesday but gold dipped below the $950 level and base metals eased as commodity markets consolidated after their recent gains.
Dr Frédéric Lasserre, head of commodities research, at Société Générale, said that risky asset classes, including equities and commodities, were benefiting from a return of macro-economic optimism and risk appetite, on the back of strong quarterly results from major US banks.
Nymex August West Texas Intermediate rose 29 cents to $64.27 a barrel. The August contract was due to expire at the end of the session and the September traded flat at $65.29 a barrel.
Although WTI has risen 8 per cent over the past five session, Mr Lasserre cautioned that there was little fundamental news to drive the market higher and that non-fundamental factors were largely responsible for recent price action.
ICE September Brent gained 21 cents at $66.65 a barrel.
Gold traded at $948 a troy ounce, moving in a range between a high of $950.75 and a low of $947.40, after ending trading in New York on Monday at $948.35.
Eugen Weinberg at Commerzbank said rising oil prices and softening in the US dollar were the major underlying factors for gold’s latest price gains.
Noting that there was an unusual positive correlation between (improving) risk appetite and the gold price (rising) in recent trading, Mr Weinberg said that Ben Bernanke’s testimony before the US congress later in the session could provide some further impetus for the market.
The chairman of the Federal Reserve was expected to provide more detail setting out the economic conditions that policymakers would view as more appropriate for an exit from their current strategy of supporting markets via by monetary stimulus and low interest rates.
Ashraf Laidi, chief market strategist at CMC markets said Mr Bernanke would hope to achieve a retreat in bond yields, stabilisation in the dollar and a pullback in oil prices.
Among the base metals, copper traded at $5,355 a tonne after hitting a fresh high for 2009 at $5,450 in Monday session.
Aluminium held above the $1,700 a tonne mark, trading at $1,716, shrugging off a hefty rise of 35,175 tonnes in London Metal Exchange stocks.
