COMMODITIES-Oil, gold slip as US budget talks drag; copper jumps

Tue Dec 4, 2012 3:48pm EST

* Oil down for 2nd day in a row, gold at 1-month low
    * Soybeans slip after touching 3-week highs
    * Cocoa tumbles 3 percent, leading loss on CRB
    * Copper rallies to a 6-week peak


    By Barani Krishnan
    NEW YORK, Dec 4 (Reuters) - Oil closed down for a second
straight session on Tuesday and gold hit a one-month low as
protracted U.S. budget negotiations and concerns over the global
economy made investors risk averse.
    Cocoa had its biggest fall in three weeks, while soybeans
gave back much of the day's gains after nearly matching the
previous session's three-week highs.
    The broad commodities sell-off came despite the dollar's
drop to a seven-week low against the euro. A weaker dollar
usually boosts commodities priced in the currency, including oil
and soybeans, as holders of the euro find those assets more
affordable.
    One of the few commodities to rise was copper, which rallied
to a six-week high on growing optimism that top buyer China was
on the road to recovery.

    COPPER BUCKS TREND
    "We think copper is going to continue to rally in the next
couple of months as from here on we should see some macro
improvement," Credit Suisse metals analyst Ivan Szpakowski said.
"We see China getting better and we think there is good
potential for restocking activity both in the U.S. and in
Europe."
    Benchmark three-month copper futures in London were
bid up 0.3 percent at $8,030 a tonne at the close, after scaling
$8,068 earlier, the highest point since Oct. 19. 
    The 19-commodity Thomson Reuters-Jefferies CRB index 
fell 1 percent, with 15 of the 19 markets it tracks settling in
negative territory.
    Cocoa led the CRB's loss, with New York-traded futures
 of the beverage and confection commodity ending down 3
percent at $2,444 a tonne due to profit-taking on the previous
week's gains. 
    
    OIL BOGGED DOWN BY U.S. FISCAL WORRIES
    In oil, London's benchmark Brent crude settled at
$109.84 a barrel, down 1 percent. Crude futures in New York
finished down 0.7 percent at $88.50. 
    Oil fell as U.S. lawmakers remained locked in talks over the
national budget. Congress is trying to avoid the so-called
"fiscal cliff", a $600 billion package of spending cuts and tax
increases effective early in 2013 that threatens to tip the
economy back into recession.
    Even if a budget deal is reached, market players said the
prospect that oil demand would remain weak next year in many
developed economies would likely drag on prices.  
    "The reality is that we're going to get through the fiscal
cliff," said Richard Ilczyszyn, chief market strategist of
iitrader.com LLC in Chicago, noting that worries about the
impact of instability in the Middle East on oil supplies was on
the back burner for the moment.
    "Demand is relatively still weak for oil," he added. 
            
    
    
    GOLD HIT BY FUND LIQUIDATION 
    Gold fell more than 1 percent as heavy fund liquidation and
options-related selling drove the precious metal below a key
technical support.
    The spot price of bullion hovered around $1,695 an
ounce after touching a one-month low of $1,691, which was also
below the 100-day moving average of $1,698 that gold had held
since mid-August.
    "You cannot attribute this kind of volatility to any sudden,
new fundamentals. There are obviously some large fund-,
algorithmic-type players moving the market around," said Bill
O'Neill, an investor in gold and partner at New Jersey-based
LOGIC Advisors. 

    SOY, CORN PRESSURED BY BRAZIL WEATHER
    An early rally in soybeans fizzled due to improving crop
weather in Brazil and slumping demand for U.S. soy exports.
    Much-needed dry weather was expected to last in Brazil
through Thursday, giving farmers time to plant corn and
soybeans, traders said.
    Weather forecasts call for 1/2 inch to 1 inch of rains in
key planting grounds in Brazil on Friday and Saturday, with
intermittent scattered showers expected for next week, said John
Dee, meteorologist at Global Weather Monitoring.
    "Brazilian weather is about as close to perfect as you are
going to get," said Sterling Smith, futures specialist for
Citigroup in Chicago. "That is taking a little bit of risk
premium out of the market."
    U.S. soybeans for January delivery ended up 0.1
percent at $14.55-1/2 a bushel after running up to as high as
$14.61, just shy of Monday's three-week high. Corn for March
 slipped 0.4 percent to $7.52 a bushel.
    Wheat futures have fallen for four days in a row, partly on
technical selling. March wheat fell half a percent to
$8.56-1/2 a bushel. 
    
 Prices at 3:25 p.m. EST (2025 GMT)      
                             LAST/      NET    PCT     YTD
                             CLOSE      CHG    CHG     CHG
 US crude                    88.47    -0.62  -0.7%  -10.5%
 Brent crude                109.81    -1.11  -1.0%    2.3%
 Natural gas                 3.539   -0.052  -1.4%   18.4%
 
 US gold                   1694.40   -25.20  -1.5%    8.1%
 Gold                      1695.60   -19.25  -1.1%    8.4%
 US Copper                  363.35    -0.65  -0.2%    5.7%
 LME Copper                8032.00    27.00   0.3%    5.7%
 Dollar                     79.627   -0.253  -0.3%   -0.7%
 
 
 US corn                    746.50    -2.50  -0.3%   15.5%
 US soybeans               1455.50     1.75   0.1%   21.4%
 US wheat                   838.50    -3.50  -0.4%   28.5%
 
 US Coffee                  137.35    -4.35  -3.1%  -39.8%
 US Cocoa                  2491.00   -71.00  -2.8%   18.1%
 US Sugar                    19.44    -0.31  -1.6%  -16.3%
 
 US silver                  32.734   -0.947  -2.8%   17.3%
 US platinum               1581.40   -30.90  -1.9%   12.6%
 US palladium               681.10    -8.35  -1.2%    3.8%