Oil Rises Above $80, Gold Near Record High on Dollar

Oil rose above $80 a barrel for the first time since October last year in New York while gold traded near an all-time high as the dollar slipped to a 14-month low against the euro, boosting the investment appeal of commodities.


The dollar index, which measures the greenback again six major currencies, fell to its lowest since August 2008, declining 0.4 percent 75.181 at 3:40 p.m. in Tokyo. Other commodities also posted gains, with copper making a six-week high in Shanghai, rubber advancing to the most in a year and corn reaching the highest in three months.

“The dollar seems to be trending in the 75 to 76 range against the basket and I’m looking for further downside on that, so I expect it will underpin oil prices,” said Peter McGuire, a managing director at CWA Global Markets Pty in Sydney in an interview with Bloomberg Television. “Certainly demand is going to increase in the coming years.”

Crude oil for November delivery rose as much as 44 cents, or 0.6 percent, to $80.05 a barrel in electronic trading on the New York Mercantile Exchange, the first time the front-month contract has traded above $80 since Oct. 14, 2008. It was at $79.80 a barrel at 2:49 p.m. Singapore time. Gold for immediate delivery was up 0.3 percent at $1,066.97 an ounce at 2:50 p.m. in Singapore, after earlier showing a loss of 0.2 percent.

‘Further Gains’ 

“Seasonal factors in the final quarter for both gold prices and the dollar are in favor of further gains,” said Stefan Graber, an analyst with Credit Suisse Group in Singapore. “Accordingly, we think the market is likely to test and eventually break the $1,100 mark.”

Oil advanced 1.4 percent yesterday and gold by 1.1 percent as U.S. equities climbed on better-than-estimated earnings and speculation the economy is healthy enough for policy makers to unwind efforts to shore up the financial system.

Hedge funds and other large speculators hold their most- bullish position ever in futures, helping to propel gold’s gains for the year to 21 percent as a weaker dollar and rising government debt spur concern that inflation may accelerate. Spot gold touched an all-time high of $1,070.80 on Oct. 14.

“There are long positions building up,” said Darren Heathcote, head of trading at Investec Bank Ltd. in Sydney. “There’s a pretty good reason for it as we continue to see the U.S. dollar weaken daily. The market is becoming more comfortable with diversification and more people are looking to get gold


Oil Technicals Bullish 

Crude may rise to $89.95 a barrel now that it has breached a key resistance level of $76.28 a barrel, according to technical analysis of Fibonacci retracements by Australia & New Zealand Banking Group Ltd.

Oil prices have gained 25 percent in the past three months as a recovery in equity markets emboldened investors and the sliding U.S. dollar prompted buying of commodities. The dollar reached its weakest against the euro since August 2008, dropping to $1.4994 before trading at $1.4967 at 3:14 p.m. in Tokyo.


The MSCI Asia Pacific Index added 1.1 percent to 121.75 as of 3:46 p.m. Tokyo time, set for the highest close since Sept. 1, 2008. The Standard & Poor’s 500 Index rose 0.9 percent yesterday.
Copper for January delivery on the Shanghai Futures Exchange rose as much as 1,340 yuan, or 2.7 percent from the previous settlement price, to 50,570 yuan ($7,408) a metric ton, the highest price since Sept. 9. The most active contract traded at 50,280 yuan at 10:56 a.m. local time.

Copper Supply 

A strike by Peruvian miners and a walkout at a BHP Billiton Ltd. mine in Chile boosted concern copper supplies may be disrupted. “On one hand, stockpiles are accumulating,” said Wu Pengfei, an analyst at Shanghai Liangmao Futures. “On the other hand, there are many risks to supply and the outlook is for demand to keep improving as well, so the bulls are winning.”

Corn advanced to the highest since June 30 as rains delayed the U.S. harvests and cold weather slowed crop growth. Wheat also climbed for a second day, while soybeans pared yesterday’s gain.

Corn for December delivery gained as much as 0.8 percent to $3.895 a bushel in electronic trading on the Chicago Board of Trade. The grain was at $3.865 as of 2:07 p.m. Tokyo time. The contract gained 3.8 percent yesterday, the biggest advance since Oct. 12.

- Via Bloomberg