Gold rose for an eighth day, gaining 0.2 percent after trading above $1,200 an ounce on Monday for the first time since June. Prices are extending a rally that’s made the metal the best performing commodity this year.
Zinc led most industrial metals higher, rising 0.5 percent for a second day of gains. Aluminum also gained 0.5 percent.
Oil in New York snapped a three-day losing streak, rebounding from a close below $30 for the second time in less than a week. West Texas Intermediate crude rose 1.2 percent to $30.04 a barrel. Gold has advanced 12 percent this year on rising concern the global economy is losing steam, with equity markets in retreat and investors cutting bets on higher U.S. interest rates. Shares in Asia fell following a drop in U.S. and European stocks on Monday as Deutsche Bank AG became the largest lender in at least four years to feel compelled to reassure investors that it has enough cash to pay its debts.
The global slowdown, including the deceleration in China, has increased speculation that U.S. growth will cool enough to force Federal Reserve policy makers to wait longer before raising rates again. The prospect of delays has sent the dollar lower and given gold a boost as an alternative investment after three years of losses. Gold’s rally this year will not last as the Fed will raise rates by 25 basis points three times in 2016.
Some gold miners glitter more than others. Evolution, which owns and operates seven gold mines across New South Wales and Western Australia, delivered record quarterly production in the December quarter. The solid performance allowed the country’s second-biggest listed gold miner to upgrade its production guidance for the 2016 financial year and lower its cost forecasts. Despite a recent upward correction, National Australia Bank reckons the Aussie is still overvalued and sees it weakening to $0.66 by mid-2016. The bank’s strategists see it trading between $0.65 and $0.75 for the rest of the year as sentiment towards commodity currencies heads south.
Meanwhile, the market is dealing with a “constant high volume” of crude oil coming from the floating storage at the Gulf Coast, the Canadian crudes coming by rail to the U.S. and domestic production.
If the volumes get too high, then the intermediate delivery steps—moving large volumes from tanks to pipelines—could be difficult if the local hub’s pipeline capacity is constrained. Iran expanded production by 80,000 barrels a day to 2.99 million in January after reaching a deal with world powers that lifted oil sanctions in return for limits on the nation’s nuclear program. Iraq increased output by 50,000 barrels a day to 4.35 million and could raise that further, according to the IEA.