COMMODITIES-Markets extend gains as dollar down

By Barani Krishnan

NEW YORK, June 2 (Reuters) - Most commodities ended higher
for a second straight session on Monday as the dollar gave back
some more of its recent gains, making raw materials priced in
the currency cheaper for holders of foreign exchange.

The greenback retreated against the yen after Standard &
Poor's cut ratings on three big U.S. securities firms. It has
been weak since Friday, snapping a rally against the euro
despite analysts thinking the currency would go to new
strengths on speculation that U.S. interest rates would soon
stabilize. [USD/]

Prices of gold, the most inflation-sensitive commodity,
climbed as the dollar fell.

"The jury is still out on whether the dollar has commenced
a long-term rebound," said David Thurtell, a precious metals
analyst at PNB Paribas.

A higher close in oil, which rose on concerns that a new
U.S. hurricane season was underway, also underpinned gold which
investors use as a hedge against rising energy costs.

U.S. gold futures for delivery in August GCQ8 settled up
$5.50 at $897.00 an ounce on the COMEX metals division of the
New York Mercantile Exchange.

Spot gold <XAU=>, which reflects the price of physical gold
bullion, rose as high as $897.10 an ounce and was at
$891.25/892.65 an ounce by 5:20 p.m. EDT (2120 GMT) in New
York, against late Friday's comparative rate of
$885.95/887.55.

But analysts said bullion prices could remain rangebound in
the near future due to weak seasonal demand.

"At the moment, physical demand is not very strong and in
the summer, investment demand is not strong either," said
Lehman Brothers analyst Michael Widmer.

U.S. crude oil CLc1 settled up 41 cents at $127.76 a
barrel on hurricane fears. London Brent LCOc1 rose 24 cents
to $128.02.

Forecasters have called for an active U.S. hurricane
season, although Arthur, the Atlantic basin's first storm this
year, quickly dissipated after forming over the weekend.
[ID:nN01393950]

Oil prices have jumped six-fold since 2002 as supply gains
lag demand growth from emerging economies such as China,
sparking fuel protests across the globe.

The head of the U.S. Energy Information Administration, Guy
Caruso, told the Reuters Global Energy Summit that prices could
hold above $100 a barrel at least through 2009 and that U.S.
gasoline prices could hit new highs during the summer holiday
driving season. [ID:nN02294432]

"If the crude oil prices stay around $120, $125, it looks
like (gasoline) might be somewhere in the $4.10 area," Caruso
said.

Other commodities that ended up on Friday were wheat, corn
and soybeans, coffee, cocoa and sugar. [GRA/] [COF/N] [COC/N]
[SUG/N]

Only copper bucked the trend, ending a little lower on
nagging worries that top consumer China was well-stocked on the
red metal and would be buying even less from the world market
in coming weeks. [MET/L]

The Reuters-Jefferies CRB index .CRB, which tracks prices
of 19 commodity futures, settled up 0.85 percent at 425.77
points.
(Editing by Marguerita Choy)