Commodities: Gold spikes on 'safe haven' calls, oil slides further

Gold spiked on 'safe haven' demand on Monday, while oil futures started yet another trading week on a negative footing.

At 1704 GMT, COMEX gold futures contract for April delivery rose 3.22% or $37.30 to $1,195.00 an ounce, while spot gold was 1.65% or $19.32 higher at $1,192.72 an ounce, as turmoil in the equities market sent investors flocking to seek safety of the yellow metal.

COMEX silver futures rose 3.74% or 55 cents to $15.33 an ounce, while spot platinum rose 1.48% or $13.45 to $925.05 an ounce.

Selected base metal contracts posted gains across the London Metal Exchange board, but the much scrutinised three-month copper delivery futures contract was down 0.2% to $4,637.50 per metric tonne at 1635 GMT.

Concurrently, primary aluminium (up 0.7%), zinc (up 2.7%), lead (up 1.8%), tin (up 2.8%) futures saw decent upticks, but the nickel (down 0.2%) contract joined copper in posting a marginal decline.

Liz Grant, senior account executive at Sucden Financial, said, “With China closed for Lunar New Year, LME turnover was particularly light but prices held around or just above Friday’s levels. Zinc moved up in early trading following news that Toho Zinc is to cut production at its Endeavor mine in Australia and tin spiked higher as buy stops were triggered through $15,250 and LME stocks were further reduced.

“Geopolitical stresses including the weekend launch of a long range rocket by North Korea and worries over global growth saw equities under pressure once again and gold make gains up towards $1,200 area.”

Meanwhile, oil futures slid further with substantial chatter about coordinated production cuts by OPEC and non-OPEC producers, but very little to show for it. The Brent front-month futures contract was down 1.56% or 53 cents to $33.53 per barrel, while WTI was 2.07% or 64 cents lower at $30.25 per barrel.

While many reckon the oil market would rebalance towards the middle of the current year, analysts Morgan Stanley said the rebalancing may not come until mid-2017.

"Despite the myriad announcements of capital expenditure cuts, production has yet to respond enough to rebalance the market," the investment bank said in a note to clients.

Finally, headline agricultural commodity futures were largely on negative turf. CBOT wheat (down 1.18%), CBOT corn (down 0.55%), ICE cotton (down 1.62%) and CME live cattle (down 2.23%) were heading lower.