Tags: Commodities | High | Expanded | Fed | Stimulus

Commodities Jump to a Two-Year High on Expanded Fed Stimulus

Thursday, 04 Nov 2010 08:33 AM

Commodities rose to a two-year high after the Federal Reserve said it would expand steps to boost the world’s largest economy, spurring demand for raw materials as a hedge against inflation.

The Standard & Poor’s GSCI Index of 24 commodities gained as much as 1.5 percent to 586.046 points, the highest level since Oct. 3, 2008. It was at 585.241 points at 11:47 a.m. in London. Palladium climbed to the highest price since 2001, and white sugar reached a 21-year high.

The U.S. Dollar Index fell to the lowest level in almost 11 months.

The Fed said yesterday it would buy a further $600 billion of Treasuries through June, expanding a stimulus program to cut unemployment and avert deflation. The central bank also said it will keep interest rates low for an “extended period.” The Fed’s plan is showing signs of success as the economy has improved, said economist Dennis Gartman.

“The economy is beginning to show signs of strength,” Gartman said in his Gartman Letter, a Suffolk, Virginia-based daily report. “Things are indeed getting better, so the money being force-fed into the system will find its way into equities and into speculation in commodities.”

A weaker dollar makes commodities priced in the currency cheaper in terms of other monies and fuels demand for raw materials as an alternative investment. The dollar index, which measures the greenback’s strength against six currencies, slid as much as 0.9 percent to the lowest level since Dec. 8, 2009.

Gold, Silver

The UBS Bloomberg Constant Maturity Commodity Index climbed as high as 1543.262 points, the highest level since Aug. 1, 2008.

Gold for immediate delivery added $14.72, or 1.1 percent, to $1,363.27 an ounce. Futures for December delivery gained $25.10, or 1.9 percent, to $1,362.70, on course for the biggest closing jump since Sept. 14.

Silver for immediate delivery rose 45.5 cents, or 1.8 percent, to $25.315 an ounce, the highest level since March 1980. Futures for December delivery advanced 87.9 cents, or 3.6 percent, to $25.315 an ounce. Immediate-delivery palladium touched $673.25 an ounce, the highest level since May 9, 2001.

Wheat for December delivery gained 9 cents, or 1.3 percent, to $6.9925 a bushel on the Chicago Board of Trade. December- delivery corn added 8 cents, or 1.4 percent, to $5.89 a bushel and soybeans for January delivery advanced 17.75 cents, or 1.4 percent, to $12.5525 a bushel. January-delivery rice jumped 25 cents, or 1.7 percent, to $14.795 per 100 pounds.

White, or refined, sugar for March delivery added $20.10, or 2.7 percent, to $768.90 a metric ton on NYSE Liffe in London after reaching $774.40, the highest level for a most-active contract for data compiled by Bloomberg going back to 1989.o contact the reporter on this story: Tony C. Dreibus in London at tdreibus@bloomberg.net.

To contact the editors responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net.

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Commodities rose to a two-year high after the Federal Reserve said it would expand steps to boost the world s largest economy, spurring demand for raw materials as a hedge against inflation.The Standard Poor s GSCI Index of 24 commodities gained as much as 1.5 percent to...
Commodities,High,Expanded,Fed,Stimulus
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2010-33-04
Thursday, 04 Nov 2010 08:33 AM
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