Commodities: Gold, Silver perform better while oil rises on Iran stalemate

The commodities market enjoyed one of its better days in almost two months with precious metals, crude oil and base metals either maintaining day before levels or ending Wednesday trading higher.

As the Iranian nuclear talks went well beyond the stated deadline of midnight on Tuesday, both oil benchmarks found support overnight, but began Asian trading marginally lower.

At 07:15 on Thursday, the Brent front month futures contract was trading down 36 cents or 0.63% at $56.74 per barrel while the WTI was trading down 42 cents or 0.84% at $49.67 per barrel.

Jasper Lawler, market analyst at CMC Markets, said: “Iran nuclear talks continue to dominate the direction of oil prices where negotiations have been extended by 24 hours twice. Having fallen sharply from the peaks reached after the Yemen air strikes, crude oil pulled higher on Wednesday with no Iran agreement in place.”

Nonetheless, anecdotal evidence suggests the prospect of Iranian crude flooding the market appear to be exaggerated. The Islamic republic is said to have up to 40 million barrels of crude oil stocked up ready for export should sanctions be lifted.

While an Iranian settlement was worthy of furthering bearish sentiment, two spot traders and four ship brokerage contacts in Rotterdam, The Netherlands, told ShareCast that it will take at until June for the cargo to be moved.

Meanwhile, a relatively weaker dollar lent support to precious metals including gold and silver, but base metals continued their tepid run. At 07:45 on Thursday, Dubai Gold Futures were trading down a fraction by 0.2% at $1183.50 an ounce. Overnight, silver ended down 0.2% at $16.56 an ounce.

Elsewhere, lacklustre Chinese manufacturing data dented overnight confidence in copper. At 16:35 on Wednesday, the three-month copper contract was trading at $6018.00, down 57 cents or 0.9%.

Chris Beauchamp, senior market analyst at IG said: “Gold and silver looked firmly weaker Wednesday morning, continuing their form of recent days, but the afternoon’s data provided buyers with the excuse that they had been waiting for as the dollar and equities declined.”

“Gold moved back to $1200, and the swift reversal meant the metal enjoyed its best day in two weeks. Oil rallied hard as well, but this commodity is still stuck in an endless chop-chop battle between buyers and sellers, making life very difficult for all concerned.”