Most commodities get ride from $120 oil

By Barani Krishnan - Analysis

NEW YORK (Reuters) - Oil at $120 a barrel is helping create new peaks in non-energy commodities other than gold, just as some investors were expecting a sector-wide correction from a stronger dollar.

Corn futures hit all-time highs in Chicago on Tuesday after historic peaks set by copper a day earlier in New York.

The two markets rallied this week as crude oil in New York rocketed past $120 a barrel, touching $122.73 on Tuesday for a second record-breaking session amid increasing supply concerns and geopolitical tensions.

Adding fuel to the rise in oil prices -- one of the main sources for inflation in everything from gasoline to bread -- was a forecast from investment bank Goldman Sachs putting a high of $200 a barrel on crude in the next two years.

"I think oil is just pulling everything higher and because of that, all these commodities have turned around again," said Edward Meir, energy and metals analyst at commodities brokerage MF Global in New York.

"The dollar was giving the bears some hope last week when it rallied. That seems to have stalled and we seem to be back to the original kind of trading strategy, which is go short the dollar and long the commodities," Meir said.

The dollar was down a second straight day against a basket of major currencies after rising strongly in two previous sessions after the U.S. Federal Reserve signalled that it may be ready to stop interest rate cuts that began in September.

CORN, COPPER ALREADY AT RECORD