Commodities rise on Greek relief
Commodities rose this morning on relief after pro-bailout parties triumphed in Greece's election, averting another financial turmoil, but the rally was seen losing steam as investors realised it would take more to resolve Europe's debt crisis.
Oil, copper, wheat and rubber jumped when markets opened as political parties supporting debt-stricken Greece's bailout won by a narrow lead at yesterday's election, fueling appetite for riskier assets.
A victory for radical leftists would have likely led to a Greek exit from the euro zone, plunging the single currency into chaos.
Gold fell, snapping a six-day rally, as the Greece news trimmed its safe-haven appeal.
The Greek political parties who won will begin forging a government today, but analysts cautioned the optimism and the price gains may be short-lived.
Most commodity prices have already come off the session's highs and gold has cut its losses, reflecting investor caution on what awaits the euro zone after the Greek poll, given high borrowing costs in Spain and Italy and the continued threat to the global economy from the region's debt crisis.
Brent crude was up 92 cents at $98.53 a barrel, well off a one-week high of $99.50 touched earlier.
US oil gained 84 cents to $84.87, after hitting a one-week top of $85.60.
Oil players are also watching the start of talks in Moscow between world powers and major oil producer Iran.
The United States, Russia, China, France, Britain and Germany are hoping to win concessions from Tehran and forestall a potential new war in the Middle East that could disrupt oil supplies.
Spot gold dropped 0.3 per cent to $1,623.40 an ounce, after falling more than 1 per cent earlier as the Greek outcome revived appetite for riskier assets.
Bullion, which often tracks movements in the euro ignored steep gains in the single currency, but analysts are convinced gold's losses should be curbed given a shaky global economy.
This week's US Federal Reserve meeting, where investors will be looking for more clues on the chances of a third round of quantitative easing after a recent spate of weak US economic data, will be key for the gold market.
Gold is up more than 4 per cent so far this month, mainly after rising by around that much on June 1st - its biggest rally in over three years - when dismal US jobs data fueled talk of more monetary easing.
Copper rose half a percent to $7,550 a tonne, coming off the session's peak of $7,615, its loftiest since May 30th.But copper's gains were trimmed by data showing average home prices in China's 70 major cities fell for a third straight month on a year-on-year basis since Beijing imposed strict curbs on property speculation more than two years ago.