Commodities rally as US deal stokes optimistic outlooks

AFP, LONDON

Sun, Jan 06, 2013 - Page 15

Commodities mostly rallied this week on investor relief as US lawmakers clinched a last-gasp deal to avoid the “fiscal cliff” of tax hikes and spending cuts in the US, stoking optimism about demand.

“The commodities markets have started the new year with a bang,” Commerzbank analyst Eugen Weinberg said.

The fiscal deal was seen as a step toward correcting US public finances, which are suffering from a huge annual deficit and accumulated mountain of debt.

Traders also digested last month’s US non-farm payrolls report, which showed modest job growth, while the US economy’s huge services sector showed a surprising expansion.

OIL: Prices jumped following news that the US — the world’s biggest consumer of crude oil — has avoided the fiscal cliff.

However, another debilitating stand-off is almost certain at the end of next month.

On Wednesday, the first trading day of the year, Brent hit US$112.90 per barrel — its highest level since mid-October. New York crude touched US$93.87, which was a mid-September pinnacle.

By Friday on the New York Mercantile Exchange, West Texas Intermediate, or light sweet crude, for delivery next month climbed to US$92.65 a barrel from US$90.97 a week earlier.

On London’s Intercontinental Exchange, Brent North Sea crude for next month gained to US$111.22 a barrel from US$110.72 the previous week.

PRECIOUS METALS: Gold faced a rollercoaster ride, soaring to US$1,694.81 on Wednesday to the highest level since Dec. 18.

However, gold plunged on Friday to US$1,625.85 — a low point last seen on Aug. 21.

Sister metal silver faced a similar fate, soaring as high as US$31.48 on Wednesday before diving to US$29.23 on Friday.

By late Friday on the London Bullion Market, gold dipped to US$1,648 an ounce from US$1,657.50 a week earlier.

Silver slid to US$29.32 an ounce from US$30.15.

On the London Platinum and Palladium Market, platinum rose to US$1,557 an ounce from US$1,527 and palladium fell to US$689 an ounce from US$675.