US-Iran tensions raise oil prices

Commodity prices were relatively buoyant on Monday despite a late sell-off in oil prices following an early spike to near-2007 highs.

ICE Brent slipped seven cents to $60.81 a barrel in late afternoon London trade, having reached an intra-day high of $61.59 earlier in the session. April Nymex West Texas Intermediate dropped 24 cents to $60.90 a barrel in early afternoon trade on the New York Mercantile Exchange.

Traders attributed the late retreat in oil prices to profit-taking following last week’s gains of about 5 per cent.

Gold reached $689 a troy ounce, its highest level in nine months on the Iran-US standoff and as the dollar hit a two-month low against the euro. But gold then followed oil prices lower, easing to $683.20/$683.75 in late European trade, though it was up more than $1 on the day.

Reuters reported that almost nine out of 10 central banks saw ample scope for further currency and asset diversification of foreign exchange reserves, according to a survey of 47 central banks published on Monday.

The poll, conducted by London-based Central Banking Publications, found many central banks were keen to invest reserves into higher-yielding and “non-traditional” assets such as stocks and commodities.

Nickel prices maintained their storming run, hitting $41,700 a tonne on the London Metal Exchange, before easing to $41,200 in late trade, up $400 on the day. Nickel prices have risen 21 per cent so far this year.

The three-month aluminium price struck its highest level since May, touching $2,902 a tonne before easing to $2,891, up $6 on the day. The metal is about $400 below the record of $3,310, reached nine months ago.

The three-month lead price hit a record high of $1,950 a tonne on the LME, while copper reached its highest level for the year, touching $6,370 a tonne.

“Short term, things may become a little overdone so corrections should not be ruled out – but the combination of short covering, Iran, oil, gold and month-end coming up could well prove be enough to push copper up towards a test of $6,500,” said RBC Capital Markets.

Traders said the return of Chinese traders from the Lunar New Year holiday last week helped boost activity.

Corn touched another 10-year high when it reached $4.3725 a bushel on the Chicago Board of Trade. US data showed that speculators increased their net long position in corn last week.