COMMODITIES-Up again as Fed vote nears; Moody's weighs on dollar
* 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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DAVOS, Switzerland - Central banks have done their best to rescue the world economy by printing money and politicians must now act fast to enact structural reforms and pro-investment policies to boost growth, central bankers said on Saturday.