As anxiety rises in markets about the prospects of global economic recovery, gold has escalated and oil is following the lead of gold as a hard asset. Off late, oil and gold have been moving in the same direction. Commodities received an impetus from rising gold values that have peaked to all-time highs past US$1000/ounce. Oil prices got pushed to US$79.6 on the Nymex, while Brent North Sea crude for December rose to US$78.1.
Concerns of inflation that could be triggered by the recent pumping of huge liquidity into the financial sector by central banks, have urged investors toward commodities to protect the value of their assets.
Earlier in the week, oil prices were buoyed by a weaker dollar and positive economic data from USA and China, though concerns over the sustainability of the economic recovery lingered. Iraq has inked a deal with British energy giant BP and China's CNPC to almost triple oil production at the Rumaila field from the current 1 mln bpd.