NEW YORK, Sept 6 Commodity markets were for the
most part little changed on Thursday as an initial rally fueled
by the European Central Bank's potentially unlimited bond-buying
program petered out.
Even as U.S. stock markets surged nearly 2 percent on hope
that the ECB might at last draw a line under the euro zone debt
crisis, oil and copper failed to maintain early gains as traders
bet that market fundamentals could not justify higher prices.
Gold, however, rose 0.5 percent to close above $1,700 an
ounce for the first time since March.
Risk markets rallied broadly at the start of U.S. trading on
upbeat U.S. jobs data and news that ECB President Mario Draghi
had won central bank agreement to undertake unlimited,
short-dated bond purchases under strict conditions to ease
funding pressures on governments that sought help.
After rising to its highest interday level since April, the
Thomson Reuters-Jefferies CRB index of 19 commodities
closed just 0.2 percent higher at 308.89. The index rose sharply
in July, but has largely stalled over the past month.
Wheat emerged as the day's biggest commodity gainer, rising
3 percent not on economic sentiment but on speculation that
global importers would soon scramble for U.S. cargoes as a
recent spate of large Russian sales depletes available supplies.
Market focus is now zeroed in on U.S. nonfarm payroll data
due early on Friday, expected to show an increase of 125,000
jobs - a potentially decisive factor in the Federal Reserve's
deliberations next week over whether to push ahead with a third
round of quantitative easing to kick-start the economy.
Data on Thursday showed U.S. private employers added a
stronger-than-expected 201,000 jobs in August and new claims for
jobless benefits fell last week to the lowest level in a month,
upbeat signals for a struggling labor market.
GOLD BACK IN VOGUE
Spot gold rose 0.5 percent to $1,701 an ounce, having
pulled back from a six-month high of nearly $1,714.
"Gold is holding because the market has been given what it
was hoping for, but in order for gold to move decisively higher
from here we need to see what numbers the U.S. will bring to the
table," Ole Hansen, senior manager at Saxo Bank, said.
Gold tends to benefit from an environment of low interest
rates, and any resulting strength in the euro against the U.S.
dollar could further fuel the rally. The euro posted small gains
after the ECB decision, hitting a two-month high.
OIL LOOKS BEYOND STOCK DRAW
Benchmark London Brent crude rose 40 cents, or 0.35
percent, to settle at $113.49 a barrel, pulling back from a
midday peak of $115.15 as profit-taking set in.
In addition to the ECB news, oil prices had been supported
by data showing U.S. crude stocks fell 7.43 million barrels last
week. A decline was largely expected after supply disruptions
following Hurricane Isaac last week, but the draw-down was twice
as large as analysts had forecast.
Oil prices have surged more than $25 a barrel since mid-June
on signs of tightening global supplies, but the rally has
stalled for the past few weeks amid signs that the United States
is considering releasing strategic oil reserves.
December wheat futures at the Chicago Board of Trade
climbed 2.8 percent to $8.91-3/4, propelled higher by news that
Egypt's state-run importer had bought 475,000 tonnes of wheat
from Russia, Romania and Ukraine at an international tender.
The deal provoked fresh speculation over whether Egypt, the
world's top wheat importer, was trying to grab as much Russian
wheat as possible before any move by Moscow to limit sales.
Russia has repeatedly denied that it would ban exports -
like it did in 2010 after a historic drought and sparking a
major rally in prices - due to a poor crop this year, yet
traders remain skeptical of its denials.
"Russia could be out of the market by the end of October,"
said grains analyst Dan Basse of AgResource Co in Chicago, who
has clients in the Black Sea region. "People could be forced to
buy from the United States or Canada."