Commodities Join In On Stimulus Rally

By Glenn Dyer | More Articles by Glenn Dyer

Oil, gold, silver, copper and iron ore all caught the latest wave of ‘optimism’ to some degree and closed higher on Tuesday.

The optimism though was tempered somewhat by more bad news from Italy on the impact of COVID-19.

Investors were hoping that Italy was past the worst of the coronavirus pandemic as deaths from the virus fell on Sunday and Monday.

But Tuesday’s update showed a surge in fatalities which totaled 743.

That, however, couldn’t overwhelm the rising optimism that the US Congress is moving closer to a $US2 trillion support and bailout deal that will help steady the slide in the economy and on Wall Street.

As a result, gold prices on Tuesday saw their largest daily percentage surge in 11 years as the precious metal extended its rally in the wake of the closure of gold mining operations, the looming deal in Congress and moves by the Federal Reserve to address the coronavirus crisis on Monday to be the banker to the US economy.

A weaker US dollar also helped boost prices.

Comex gold for April delivery leap $US93.20, or about 6%, to settle at $US1,660.80 an ounce. That was gold’s its largest one-day dollar gain based on records dating back to November 1984, and the biggest daily percentage rise since March 2009, according to Marketwatch.com.

Comex May silver jumped 99.6 cents, or 7.5%, to $US14.257 an ounce, a day after Monday’s 7.1% jump.

Copper finally turned up with the May Comex contract adding 3.8% to $US2.18 a pound.

Investors finally got the importance of the Fed’s decision on Monday that will see it purchase an unlimited amount of Treasuries and mortgage-backed securities to support the financial market.

Meanwhile, three of the world’s largest gold refineries—Valcambi, Argor-Heraeus and PAMP—have suspended production in Switzerland for at least a week because of the mandatory closure of non-essential industry in the country to prevent the spread of coronavirus.

Together, the refineries process around a third of the total global annual supply, the report said.

Last week the Royal Canadian Mint closed its operations because of the country’s lockdown.

Oil though didn’t share all the outbreak of confidence. May West Texas Intermediate crude futures rose by 65 cents, or 2.8%, to settle $US24.01 a barrel in New York, but down from earlier highs above $25.

It fell back under $US24 a barrel in early dealings in Asia.

May Brent crude – the global benchmark – rose 12 cents, or 0.4%, to $US29.74 a barrel in Europe.

It also eased in after-hours trading as investors realise the oil war between Saudi Arabia, Russia, and the US fracking sector continues with no sign of a settlement.

Iron ore partially regained Monday’s 4% loss with a gain of more than 3%, or $US2.90 cents for 62% Fe fines delivered to northern China. They ended the session at $US83.97 a tonne.

The 10-year Treasury note yield rose 5.3 basis points to 0.820%, while the 2-year bond rate jumped 10 basis points to 0.394%. The 30-year bond yield also rose, up 5.3 basis points to 1.399%.

Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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