Crude oil, as we expected yesterday, continued its rally on Tuesday on the back of strong data from the Chinese economy and on the high expectations of second round of quantitative easing this week, especially after the quarterly US GDP figures showed less than expected growth last Friday. Light sweet crude oil for December delivery rose by $1.52 to $82.95/barrel.
Saudi oil minister Ali al-Naimi told a conference in Singapore this morning that oil prices between $70 and $90 are well within the range of customers. The statement helped oil prices jump. At 0438 GMT, oil for December delivery was trading at $83.33/barrel up by 38 cents.
Gold, on the other hand, fell $6.50 to close at $1,351.10 per troy ounce, trading as high as $1,366.40 and as low as $1,349.10. Some strengthening of the USD against Euro has put pressure on gold prices. It will be interesting to see how USD and gold end up this week as it is highly likely that there will be QE2 but if the size of this easing is less than market’s expectation of $500 billion, we might be seeing pressure on the yellow metal prices.