Commodities: Brent extends gains, China reports rise in official gold holdings

Commodity prices continued to advance on Tuesday amid generally 'risk-on' trading, although traders were carefully scanning the headlines out of the second round of US-China trade talks in Beijing.

Indeed, late afternoon reports according to which the US and China were still not ready to finalise a deal - although progress had been made - saw traders book some profits.

As of 1815 GMT, the Bloomberg commodity index was up by 0.53% at 78.99 even as the US dollar spot index was edging up by 0.18% to 95.8360.

Within that, energy futures were all in the green, with front month Brent crude oil futures adding 1.80% to $58.36 a barrel on the ICE, although they remained off their best levels of the day at $58.87 a barrel.

Natural gas futures were also well bid, with the February contract 2.31% higher in NYMEX trading to $3.01/MMBtu. amid market commentary highlighting the possibility that the Northern hemisphere might be in for a repeat of 2018's 'Beast from the East' towards the end of January.

Base metals' prices were mixed with three month LME copper slipping from $5,920 per metric tonne at the open to $5,906.

In a research note sent to clients describing the trading conditions througout the session, analysts at Sucden Financial said: "LME trading activity today was in similar vein to yesterday, with flat price turnover low/mod, narrow ranges and mostly either side of last night’s closes. Bereft of any clear directional signals [...]."

Gold futures on COMEX were also soft, with the February contract dipping 0.26% to $1,286.50/oz..

Nevertheless, Ross Strachan at Capital Economics noted the small increase seen in China's reported official sector holdings of the yellow metal - for the first time in more than two years, although he added that at least for the moment Russia continued to be the main buyer among central banks.

"In summary, even without China, we think central banks are still set to buy around 500 tonnes in 2019 (about 12% of total demand), markedly higher than the 375 tonnes acquired in 2017. However, it is possible that if China were to resume regular reported buying that 2019 (excluding years with a large step change in Chinese holdings) could see the highest central bank purchases since the end of Bretton Woods."