COMMODITIES-Most markets turn sharply higher after dollar drops

Thu Aug 15, 2013 10:49pm BST

By Carole Vaporean
    NEW YORK, Aug 15 (Reuters) - After beginning lower, most
commodities prices reversed course on Thursday when the dollar
turned downward, with natural gas, corn, and gold rallying well
over 2 percent, silver jumping more than 5 percent and oil
hitting a four-month high.
    Crude oil prices rose on both sides of the Atlantic, with
Brent prices hit a four-month high on fears that escalating
violence in Egypt could affect the Suez Canal or spread across
the Middle East, where supplies already face disruptions.
 
    Front-month September Brent, which expired on
Thursday, settled 91 cents higher at $111.11 a barrel, after
hitting its highest since April 2. More-active October oil
 was up 78 cents at $109.60. 
    U.S. oil rose 48 cents to settle at $107.33.
    While many commodity markets, from coffee and soybeans to
crude oil and aluminum, kept the two-day  advance going, others
trimmed early sizable losses.
    The Thomson Reuters-Jefferies CRB index of
19-commodities raced up 0.83 percent to a high last reached on 
April 3. The price measure logged a 1.55 percent gain for the
last two sessions and almost 4.25 percent since it began to rise
from a one-month bottom on Aug. 7.
    Gold rose to a near two-month high, gaining 2.3
percent at $1,365.54 as a fall in the dollar triggered
short-cover buying and a technical breakout once prices breached
a key resistance level at $1,350 an ounce.
    After falling earlier in the day, gold staged an impressive
$50 rally as economic data gave conflicting readings on U.S.
growth.  
    "Today's move was mostly driven by technicals, and that
spooked the bearish bets out of the gold market," said Axel
Merk, chief investment officer at California-based Merk Funds,
which manages about $500 million of currency mutual-fund assets.
    Silver climbed more than 5 percent to $22.96,
extending its winning streak to a seventh session, with platinum
 and palladium also posting steep gains. Palladium
was up almost 3.20 percent in late trade.  
    Mixed readings from economic reports muddied views on when
the Federal Reserve might begin reducing its stimulus measures.
 
    As a result, the dollar fell broadly, but not before it
reached August peaks against the euro and yen. 
    Some commodity investors reasoned that either way, prices
likely had scope to rally. A pick-up in economic growth should
increase demand for raw materials, but if growth continues to
drag, interest rates will remain low, keeping dollar gains in
check and making commodities cheaper in overseas markets.
    Data on Thursday showed that claims for U.S. jobless
benefits fell to a near-six-year low and consumer prices rose
broadly. 
    Talk about the timing of an end to the Fed's bond buying has
dominated markets. The U.S. central bank's next policy-setting 
meeting will be held on Sept. 17-18, when it is widely expected
to announce a decision about its monthly bond buying. 
    The latest U.S. manufacturing data came in below
expectations, hitting copper. The industrial metal was already
down on reports of increased production, though growing
confidence about a global economic recovery underpinned prices.
    Signs that the pace of growth in top metal consumer China is
steadying after contracting for more than two years has driven a
rally in copper prices this month. 
    Three-month copper on the London Metal Exchange,
fell 0.1 percent to $7,309.15 a tonne in after-hours trade. 

 Prices at 3:25 p.m. EDT (1925 GMT)      
                              LAST/      NET    PCT     YTD
                              CLOSE      CHG    CHG     CHG
 US crude                    107.22     0.37   0.4%   16.8%
 Brent crude                 111.10     0.90   0.8%    0.0%
 Natural gas                  3.419    0.077   2.3%    2.0%
 
 US gold                    1361.60    27.60   2.1%  -18.7%
 Gold                       1364.54    29.95   2.2%  -18.5%
 US Copper                     3.34     0.00   0.0%   -8.6%
 LME Copper                 7309.00    -9.00  -0.1%   -7.8%
 Dollar                      81.136   -0.575  -0.7%    5.7%
 CRB                        292.448    2.410   0.8%   -0.9%
 
 US corn                     481.50    16.75   3.6%  -31.0%
 US soybeans                1288.25    18.75   1.5%   -9.2%
 US wheat                    637.50     7.00   1.1%  -18.1%
 
 US Coffee                   121.85    -0.80  -0.7%  -15.3%
 US Cocoa                   2436.00   -20.00  -0.8%    8.9%
 US Sugar                     17.19    -0.06  -0.3%  -11.9%
 
 US silver                   22.935   22.717   1.7%  -24.1%
 US platinum                1532.30    27.10   0.0%   -0.4%
 US palladium                756.85    16.50   2.2%    7.6%