What a difference a day makes. Monday saw gold slide on a relaxation of fear in markets and oil rise on expectations of a postponement of a two million barrel a day rise in production by OPEC and its allies at a meeting Tuesday.
24 hours later, no deal, more talks Thursday, oil drops around 2% and gold goes for a scoot, surging more than 2% to back over $US1,800 an ounce, which will get the ASX-listed gold sector running today after a week of weakness.
A weaker greenback helped – the Aussie dollar traded around 73.60 US cents after 7 am Wednesday in Asia
Brent crude was down 75 cents at $47.13 a barrel early this morning but had crawled back into the green by 7am Sydney time to around $US47.43. West Texas Intermediate was down 74 cents at $44.60 at 7am (after being down more than 1% earlier in the session).
The two moves are not linked – oil’s fall was linked to a split between OPEC members and Russia – OPEC wants the cap to remain in place until the end of March, Russia wants a gradual increase – it claims its budget is OK, but analysts say the country is hurting with the extra costs from the pandemic hitting hard.
Gold ran on the worsening outlook for the US with COVID infections and deaths climbing, more and more states under siege (such as California where its acute hospital beds are almost full) and no sign of any approval of COVID-19 vaccines.
Surveys of global manufacturing showed activity at near-decade highs. Asian economies were stronger, as we saw with China’s reports, the eurozone weak and on track for its first double dip recession in a decade.
But US activity slowed noticeably with a sharp fall in new orders worrying economists.
Comex gold settled at $US1,804.90 an ounce, up 2.1% and surged in after-hours trading to more than $US1,817 an ounce at 7.15 am. Comex silver was up more than 6% to more than $US24 an ounce at 7.15 am.
Copper prices however continued to surge – hitting new seven year highs – above $US3.50 a pound on Comex, while on the LME in London three month copper traded around $US7,677 after touching $US7,743
And off the back of copper, LME aluminium hit a two-year high of $US2,069 a tonne before slipping to $US2,061.50, up 0.8% from Monday.
Iron ore continued to rise – the price of 62% Fe fines delivered to northern China rose 50 cents to $US132.50, a new 2020 high and the highest level for more than 6 years.