Oil prices up trading around $80, gold near $1100 – time to buy?

Oil prices rose above $80 a barrel on Wednesday, extending the previous trading session’s near 2 percent gain as gold prices hit a record high above $1,090 per ounce and the US dollar weakened.

US crude oil futures for December rose 64 cents to $80.24 a barrel by 0951 GMT, after settling up $1.47 on Tuesday on the NYMEX. London Brent crude added 49 cent to $78.60 a barrel on the ICE Futures Exchange.

The US dollar fell against a basket of currencies on Wednesday, helping to send gold prices to record highs and lifting oil prices at the same time. A weaker US dollar makes commodities like oil cheaper for those holding other currencies.

“I think a combination of the weaker dollar and inventories is lifting oil,” said Carsten Fritsch, oil analyst at Commerzbank in Frankfurt.

“If you look at the pure data we’ve received, these have been positive,” said Tobias Merath, a commodity analyst at Credit Suisse Group in Zurich. “The dollar has been weaker, and sentiment across commodities has improved, so we’re testing the upper end of the $75 to $80 range.”

Many experts have forecast that the US dollar is going to continue to fall against most other currencies, which has the effect to raise commodity prices in general including crude oil prices and the price for an ounce of gold. Time to start trading in oil or a buy signal for gold?

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