Commodities: Gold and oil steady, as base metals trade higher

Gold was holding firm around $1,200 an ounce, as the yellow metal's dollar connect came under scrutiny again over the uncertainty surrounding a further cut by the US Federal Reserve.

At 07:06 BST on Friday, COMEX for June delivery was trading marginally higher at 0.20% or $2.40 at $1,200.40 an ounce, having recovered from overnight losses which saw the shiny metal drop to as low as $1,198 an ounce at one point.

Additionally, spot gold was trading at $1,202.01 up 0.29% or $3.46 in early Asian trading while COMEX silver was for May delivery was broadly flat at $16.29 an ounce.

IG market analyst Alastair McCaig noted that the commodities world was certainly not immune to a Greek default.

“Escalating worries that Greece will default on its debt and the ultimate decision surrounding its inclusion in the Eurozone has helped squeeze gold higher as the precious metal once again breaks above the $1,200 level.”

Meanwhile, oil prices continued to rise with the stock take-up of US refineries seen to be increasing in tandem with oversupply concerns easing. The Brent front month contract for June delivery was trading at $63.55 per barrel down 0.67% or 0.43 cents, while West Texas Intermediate (WTI) was down 0.44 cents or 0.78% at $56.27.

Wednesday's 6% jump in WTI has not been replicated since, with US traders indulging in a bit of profit-taking on the benchmark as the current contract comes to an end after a torrid March. Meanwhile, OPEC has predicted that US crude production would fall in the second half of the year, thereby reducing the global oversupply.

"Higher global refinery runs, driven by increased seasonal demand, along with the improvement in refinery margins, are likely to increase demand for crude oil over the coming months. Given expectations for lower US crude oil production in the second half of the year, these higher refinery needs will be partially met by crude oil stocks, reducing the current overhang in inventories," it was noted in the cartel's monthly market report.

Elsewhere, copper prices strengthened following an overnight rally in Chinese stocks and market sentiment in favour of further economic stimulus strengthened. Lead and zinc traded also traded higher on the news.

Three-month London Metal Exchange copper contract closed up 2.2% to $6,067.50 per tonne on Thursday; the biggest percentage gain since 20 March. Lead rose 2.1% to $2041.75 per tonne, while zinc closed up 1.4% at 2238.00 per tonne with both base metals capping four-month highs.

On the soft commodities front, CBOT corn and wheat contracts were down, while ICE cocoa and cotton contracts were trading up.