Crude oil rose to $79 a barrel after data showed U.S. factory orders in September expanded at a quicker pace than expected, signaling potential for more fuel demand in the world's biggest energy consumer. Factory orders expanded 0.9% in September, surpassing Wall Street analyst expectations, and factory inventories fell. Factory orders are a positive sign. The positive U.S. economic data helped reverse an earlier 2% price decline in oil prices, when investors shunned riskier assets including oil. Crude prices remained nervous in early trade as the U.S. dollar firmed to a one-month high against other currencies and equities fell after disappointing earnings from Swiss banking giant UBS. Analysts said a recovery in industrial activity may help justify higher oil prices. OPEC member Venezuela, however, said it saw no need for the producer group, which pumps a third of the world's oil, to raise crude output when its ministers meet in December. Some OPEC members have signaled they may call for OPEC to produce more crude if global crude stocks fall and prices rise.
Gold accelerated to a record high above $1,085 per ounce, defying dollar strength as the International Monetary Fund's 200 tonne sale of gold to India's central bank boosted sentiment toward the metal. IMF said it had sold 200 tonnes of gold to India for $6.7 billion. Although an IMF gold sale had been flagged for some time, it lifted some uncertainty from the market by helping soak up potential supply. The IMF sale, part of an agreement to sell about an eighth of the Fund's stock, fuelled speculation that other governments including Beijing may be ready to diversify their reserves even at near record prices. However U.S. dollar surged to a onemonth high against a basket of currencies on as concerns about the global banking sector and weaker equity markets boosted the greenback's safe-haven appeal. Some analysts attributed losses in bank shares and the euro partly to European Commission estimates of bank losses renewing anxiety over the sector's health.
Copper prices plunged as investors sold the metal ahead of a Federal Reserve meeting on monetary policy in the United States, the world's largest economy, and scrutinized rising U.S. factory data. Investors are focused on what the central bank has to say about economic growth and the future direction of benchmark interest rates. U.S. Federal Reserve starts a two-day meeting on Tuesday. Investors are focused on what the central bank has to say about economic growth and the future direction of benchmark interest rates.
Courtesy: Religare Commodities
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