London - A relief
rally in oil and commodities markets after a last-minute US debt deal is likely
to prove short-lived, while US and European debt problems remain far from being
solved and economic data raise fears of a new global recession.
Analysts said on Monday concerns about a double dip in
Europe and the United States, combined with signs of a slowdown in the Chinese
economy, will push gold - the ultimate safe haven these days - to new highs.
"There is every possibility that it is a fool's rally -
a kind of thank you to the man holding you hostage for a reprieve that turns
out to be only temporary," said David Hufton, managing director of brokers
PVM Oil Associates.
Oil, metals, grains and soft commodities all rose on Monday
and gold fell after US Congressional leaders agreed on a deal to avert default.
But by 12:00 GMT the rally had lost steam. Oil was up $1 per
barrel compared with gains of $3 per barrel during Asian trading.
Republican and Democratic lawmakers were expected to vote
later on Monday on a White House-backed deal to raise the country's $14.3
trillion borrowing ceiling and cut $2.4 trillion from the deficit over the next
decade.
Stock markets also rose around the world after President
Barack Obama announced the deal, with US stock index futures for the S&P
500 up 1.2% by 8:00.
"The addict has been given another big fix. It is still
an addict and a hopeless one at that. It's clear that the deficit is not under
control," said Tom Winnifrith from t1ps Investment Management, which
invests in small cap gold and metals companies.
Talk of dreaded double dip
"The problem is that people are not fooled by official data. They just know the numbers do not stack up even if the credit agencies will not dare to admit it yet," said Winnifrith.
He said he believed the US' triple A rating would be cut
soon and that gold would rise by more than a quarter from its recent all-time
high of above $1 600 an ounce before Obama faces reelection in November 2012.
The US gross domestic product (GDP) came out much worse than
expected last week and the market is awaiting non-farm payrolls data on Friday,
with talks of a double-dip recession already resurfacing.
"The problems of the high indebtedness in the United
States are not going to disappear just because of any agreement. Markets are
going to start asking questions about US debt in the longer term," said
analyst Eugen Weinberg from Commerzbank.
Amrita Sen from Barclays said the bank's economists viewed
the debt deal as not large enough to stabilise the debt/GDP ratio in the long
run.
"And this, perhaps more than just one sequel, is very
likely until the overall asset market balance and a stable economic growth
trajectory is restored on a sustainable basis," she said.
Harry Tchilinguirian from BNP, however, said he thought
worries about short supplies would prevent oil prices from plunging.
"The whole absence of Libyan oil from the market has
not disappeared and it's very real... People tend to see them on the back burner
but they can quickly come back," he said.