Commodities were boosted today as a fall in the US dollar from six-month highs helped boost copper, gold and grains.
Gold rose more than 1 per cent, Shanghai copper climbed 3 per cent, while US corn and soybeans markets were up almost 3 per cent.
"Basically people are coming in and buying on the dip," ANZ's senior commodity analyst, Mark Pervan, said. "We have seen a heavy sell-down in the last three or four weeks and people now think it's little overdone."
Oil rose more than 1 per cent to above $115 on a potential threat to production from a tropical storm in the Gulf of Mexico. US light crude for September delivery was up $1.26 at $115.03 a barrel by 0615 GMT, as investors focused on a possible supply threat from Tropical storm Fay to oil and gas production in the Gulf of Mexico.
"The storm threat is the main driver here," said Gerard Burg, a commodities analyst at the National Bank of Australia in Melbourne.
"Oil prices also fell to the lower end of the recent trading range on Friday, so some traders in the market probably saw that as a buying opportunity."
The contract settled at $113.77 a barrel on Friday, after dipping to $111.34, the lowest level since May 2.
Commodities, which as an asset class have shed around 20 per cent since peaking in early July, drew strength from the dollar which eased from a six-month high against the euro.
Shanghai copper bounced more than 3 per cent and zinc rose 2.5 per cent, reversing some of Friday's losses, while London metals also rose. But prices could fall another 10 per cent, analysts said, as demand growth softens and the dollar heads higher again.
Shanghai November copper the most active contract, rose 3.4 per cent to 57,930 yuan ($8,433) and London Metal Exchange three-month copper jumped $95 to $7,455.
"We are still looking for declines in broad terms this year and next year," National Australia Bank analyst Gerard Burg said. "Copper and aluminium will probably be the strongest of the base metals, and those that are most suitable for substitution, hardest hit."
Precious metals prices were mainly up due to technical short-covering, but many investors were careful about buying too actively amid concerns over a slower economy and a strengthening dollar, traders said.
Spot gold was at $797.55/799.65 an ounce, up 1.3 per cent from $787.65/789.25 late in New York on Friday. It touched an intraday high of $801.55.
US corn and soybean futures rose more than 2 per cent today, rebounding from a sell-off in Chicago on Friday when a jump in the dollar prompted investors to exit commodities.
The benchmark September corn futures contract was up 2.7 per cent at $5.44 per bushel, while September delivery soybean futures contract rose 2.7 per cent to $12.43-¾ per bushel.
But Malaysian palm oil futures bucked the uptrend, losing more ground on speculation that buyers will continue to default on cargoes.
The benchmark crude palm oil November contract on the Bursa Malaysia Derivatives Exchange fell 0.7 per cent to 2,434 ringgit.
Reuters