COMMODITIES-Up again as Fed vote nears; Moody's weighs on dollar

Tue Sep 11, 2012 8:38pm BST

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* All eyes on Fed meeting; Moody's hints at US downgrade
    * Oil up for 5th straight day; copper rises for 4th session
    * Gold sees heavy positioning in options at above $1,800/oz
    * Natgas up 7 pct on technical buying
    * Arabica coffee extends short-covering run to 6-week high

    By Barani Krishnan
    NEW YORK, Sept 11 (Reuters) - Expectations that the Federal
Reserve will act to bolster the U.S. economy lifted commodity
prices for a fourth straight day on Tuesday, with a weak dollar
providing further inflationary support.
    Oil, gold and copper -- among the favorite plays of
commodity speculators -- stayed in positive territory, making
slight gains, as investors awaited word on whether the Fed will
roll out a new stimulus to aid the U.S. recovery.
    The Fed concludes a two-day meeting on Thursday, at which
time some analysts and investors expect the central bank to
announce a third round of quantitative easing, or bond-buying,
that  likely will inject cash into financial markets.
    The dollar fell to a four-month low against the euro
 on bets the Fed will take affirmative action to help the
economy. Fears about a credit rating downgrade of the
United States by Moody's also weighed on the greenback.
 
    In Europe, investors were counting on Germany's top court to
approve the euro zone's new bailout fund and budget rules by
next week, lending more strength to the euro. 
    "Everybody and their grandmother are betting on at least
some short-term stabilization in these markets just due to some
kind of collective or coordinated intervention or monetary
policy," said Sean McGillivray, vice president and head of asset
allocation for Great Pacific Wealth Management in Oregon.
    "It's absolutely all speculative on the fact that we are
going to see raw commodities move higher based on
liquidity-fueled inflation."
    Indeed, some analysts were expecting markets to rally only
briefly if the Fed approves more stimulus, and for a selloff to
occur thereafter.    
    "The whole QE3 thing has been baked into markets for weeks
now and people are just waiting to take profit," said Charles
Gradante, co-founder of the New York-based Hennessy Group, which
invests in hedge funds.
    "The economic outlook, with the global recession and all,
does not support these prices," Gradante said.
    
    OIL UP FOR 5TH DAY 
    The Thomson Reuters-Jefferies CRB index for commodities
 raced to a near six-month high, with 12 of its 19
components showing gains. Natural gas was the biggest
winner, rising nearly 7 percent on technical buying.
Arabica coffee extended Monday's wild short-covering run,
to a six-week high. 
    U.S. crude oil's front-month contract settled up 63
cents, or 0.7 percent, at $97.17 a barrel. The market had gained
2 percent in all over the past week, rising for five straight
sessions, almost entirely on speculation that there will be QE3.
 
    Copper rose for a fourth day in a row, hitting a four-month
high.
    London's benchmark three-month copper peaked at
$8,127.75 a tonne, its highest level since May 10, before ending
the day up $22 at $8,090. 
    In New York, copper's most-active December contract 
rose 0.85 cent to settle at $3.6970 per lb, after soaring to a
four-month high of $3.7125. 
    Gold rose toward a six-month high, lifted by the dollar's
weakness after Moody's warning on U.S. creditworthiness and by
strong investment buying in gold exchange-traded products.
    U.S. gold futures for December settled up 0.2
percent, just shy of $1,735 an ounce. Like oil, gold has risen
about 2 percent in value over the past week on QE3 expectations.
    Traders said heavy positioning in December call options at
strike prices above $1,800 an ounce suggests that many investors
believe gold could rise further by the end of the year.
    "Every piece of bad news seems to be good for gold, only
because it translates into something that the Fed has to do to
get this economy off the ground," said Anthony Neglia, president
of Tower Trading and a gold options floor trader in New York.
 
    
 Prices at 3:06 p.m. EDT (1905 GMT)      
                             LAST/      NET    PCT     YTD
                             CLOSE      CHG    CHG     CHG
 US crude                    96.96     0.42   0.4%   -1.9%
 Brent crude                115.25     0.44   0.4%    7.3%
 Natural gas                 2.992    0.180   6.4%    0.1%
 
 US gold                   1734.90     3.10   0.2%   10.7%
 Gold                      1731.40     6.61   0.4%   10.7%
 US Copper                  371.45     1.45   0.4%    8.1%
                             
 Dollar                     79.867   -0.389  -0.5%   -0.4%
 CRB                       314.890    1.650   0.5%    3.1%
 
 US corn                    781.25    -6.00  -0.8%   21.8%
 US soybeans               1700.75   -17.50   xx     xx.x 
 US wheat                   895.75    -5.75  -0.6%   37.2%
 
 US Coffee                  177.55     3.90   2.2%  -22.2%
 US Cocoa                  2632.00   -21.00  -0.8%   24.8%
 US Sugar                    19.44     0.01   0.1%  -16.3%
 
 US silver                  33.509   -0.065  -0.2%   20.0%
 US platinum               1606.00     3.20   0.2%   14.3%
 US palladium               674.40     2.15   0.3%    2.8%
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