Commodities resume climb as dollar weakens
NEW YORK — The dollar resumed its fall against other currencies Monday, lifting commodities like gold, copper and oil.
The Reuters/Jefferies CRB index, a widely used measure of commodities trading, soared 1.3 percent to its highest level of the year. The index is up 21.8 percent year-to-date, after plunging about 50 percent in the last six months of 2008.
The gains were driven by a weak dollar, which makes commodities cheaper for foreign investors. Gold also tends to rise on a weak dollar since it is used as a hedge against inflation.
The ICE Futures U.S. dollar index, which tracks the greenback against other major currencies, fell 0.3 percent in afternoon trading. The index is at its lowest levels since August 2008.
Gold for December delivery rose $6.60 to $1,058.10 an ounce on the New York Mercantile Exchange, while oil prices rose $1.08 to settle at $79.61 a barrel. Crude has risen nearly 13 percent this month alone.
The commodities rally hit a bump late last week as the dollar regained some strength, but analysts still say the overarching trend in the coming months is more weakness in the dollar and gains in commodity prices.
Analysts predict more weakness in the dollar partly because of rock-bottom interest rates in the U.S., which the Federal Reserve has been promising to keep low. Those low rates tend to encourage foreign exchange investors to seek higher yields in other currencies.
Other precious metals rose alongside gold Monday. December silver gained 20.5 cents to $17.6250 an ounce, while October platinum jumped $16.40 to $1,358.10 an ounce.
Among industrial metals, December copper futures added 12.1 cents to $2.9665 a pound.
In other Nymex trading, heating oil rose 2.25 cents to $2.0522 a gallon. Gasoline for November delivery rose less than a penny, closing at $1.9872 a gallon.
Natural gas for November delivery rose 5.2 cents to $4.8350 per 1,000 cubic feet.
Grain prices rallied on the Chicago Board of Trade.
December wheat futures rose 19 cents to $5.1775 a bushel, while corn for December delivery gained 14.25 cents to $3.8625 a bushel.
November soybeans rose 18.75 cents to $9.9625 a bushel.
Among other soft commodities, December cocoa futures rose $32 to $3,305 a ton, while December coffee soared to a 14-month high of $1.4540 a pound, before settling up 1.4 cents at $1.4425 a pound.
Prices for sugar and orange juice also rose. Cotton fell.
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