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