Commodities prices rose in the final trading of the year as investors looked past modest gains in the dollar and predicted the greenback would slump this year.
Gold for February delivery rose US$3.70 to settle at US$1,096.20 an ounce on the New York Mercantile Exchange. Investors use gold in part to protect against drops in the greenback so demand for the precious metal often rises when the dollar slides.
The dollar rose on Thursday but concerns about weakness in the dollar this year boosted demand for gold.
Gold is down 10.7 percent from a high of US$1,227.50 on Dec. 3, but it still rose 24 percent for the year.
Meanwhile, oil touched US$80 a barrel on Thursday for the first time in seven weeks.
The ICE Futures US dollar index, which measures the dollar against a basket of currencies, rose less than 0.1 percent.
Copper rose in part as investors grew concerned about the possibility of a strike at mines in Chile. March copper futures rose 0.15 cent to US$3.3465 a pound. It reached a new high for the year during trading.
Richard Ilczyszyn, senior market strategist at Lind-Waldock, a futures brokerage, predicts commodities will remain strong this year because he doesn’t expect strength in the dollar in the past month will hold.
“I don’t have that much faith in the dollar short-term,” Ilczyszyn said, looking ahead six months to a year.
Ilczyszyn said the Federal Reserve is likely to hold interest rates at record lows to help prop up the economy. That could hurt demand for the dollar and investors seeking stronger returns could look for investments like stocks and commodities.
The dollar rose last month on expectations that the Fed might have to raise rates sooner than some investors had expected because of a strengthening economy.
“I think the Feds are going to definitely use interest rates as another tool in the arsenal to keep consumer confidence up as well as the equities,” he said.
Ilczyszyn also expects that strengthening economies in developing countries like China will boost demand for raw materials.
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