COMMODITIES-Gold up on Italy election worries; oil reverses rally
* Biggest gold rally since Oct after official trade session * Oil reverses rally after close on fears over Italy polls * Gas, silver run-up too; sugar, cocoa and wheat down By Barani Krishnan NEW YORK, Feb 25 (Reuters) - Gold gained its most in nearly five months on Monday, with safe-haven buying lifting the precious metal in post-session electronic trade as U.S. stocks slid and as oil reversed an early rally. In base metals, copper rebounded from a six-day losing streak, although gains were kept in check by slower growth in demand and manufacturing activity in top consumer China. Among crops, raw sugar fell after a global supply glut checked an early rally, and arabica coffee retreated from a two-week high. Wheat fell to an 8-month low as wetter U.S. Plains weather boosted harvest prospects. Thomson Reuters-Jefferies CRB index settled up slightly. Although it had risen marginally on Friday as well, the index had tumbled 1.7 percent through last week -- marking its sharpest weekly decline in nearly four months. Eight of the 19 commodities tracked by the CRB settled up. Aside from gold's rise of more than 1 percent, two other commodities led the CRB's advance: natural gas and silver. Gas surged nearly 4 percent on expectations that chilly U.S. weather forecasts for most of the next two weeks would increase heating demand. Silver rose 2 percent, rallying on the coattails of gold. GOLD BOUNCES TO NEAR $1,600 Gold rose to near $1,600 an ounce after conflicting early forecasts of Italy's election raised fears a divided parliament in the debt-laden country could hamper the euro zone's stability. The S&P 500 index for U.S. stocks fell almost 2 percent on the news. Recent comments by top Federal Reserve officials suggesting the U.S. central bank could reduce or halt its asset buying has hit demand for gold. Investors are focusing on Federal Reserve Chairman Ben Bernanke's semiannual testimony to Congress on Wednesday for hopes of more economic stimulus. Overall confidence in gold has been fragile lately. The total volume of bullion held by investors in SPDR Gold Trust - the world's largest exchange-traded fund (ETF) for gold -- fell 42.3 tonnes to 1,280.67 tonnes last week in the largest weekly outflow since August 2011. "Clearly, gold could be going up ahead of the Bernanke testimony tomorrow," said Axel Merk, chief investment officer of Merk Funds which manages $630 million in mutual fund assets. "And gold has had quite a wash-out, so on a relative basis it is more attractively priced than other assets." U.S. gold futures for April delivery settled up $13.80 at $1,586.60, with trading volume in line with their 250-day average, preliminary Reuters data showed. In after-hours trade, the contract rallied to $1,596.50, gaining 1.4 percent, for the largest one-day run-up in gold futures since Oct. 1. BRENT CRUDE OIL DOWN TO AROUND $113 Oil prices slipped with other financial markets after exit polls from Italy's national election indicated the country could be heading for political stalemate, sparking fears of instability in the euro zone's third largest economy. Oil's benchmark Brent crude rose as much as 1.5 percent in early trade to a high of $115.87 a barrel, before settling just 34 cents up at $114.44. In post-settlement trade, it fell to as low as $113.31. U.S. crude slipped to $92.07 a barrel in New York after finishing at $93.13 during the official session. Prices at 5:18 p.m. EST (2217 GMT) LAST/ NET PCT YTD CLOSE CHG CHG CHG US crude 92.18 -0.95 -1.0% 0.4% Brent crude 113.51 -0.59 -0.5% 2.2% Natural gas 3.414 0.123 3.7% 1.9% US gold 1586.20 13.80 0.9% -5.3% Gold 1593.64 -0.22 0.0% -4.8% US Copper 354.30 1.00 0.3% -3.0% LME Copper 7836.00 35.00 0.4% -1.2% Dollar 81.791 0.309 0.4% 6.5% US corn 693.50 3.25 0.5% -0.7% US soybeans 1451.25 -10.00 -0.7% 2.3% US wheat 699.25 -15.75 -2.2% -10.1% US Coffee 142.60 -0.50 -0.3% -0.8% US Cocoa 2144.00 -17.00 -0.8% -4.1% US Sugar 18.01 -0.23 -1.3% -7.7% US silver 28.987 0.527 1.9% -4.1% US platinum 1620.70 13.30 0.8% 5.3% US palladium 749.05 13.75 1.9% 6.5% Oil prices rose on Friday after a strong reading for German business morale and coffee and sugar rallied too, helping a broad commodities index end up the first time in nine sessions. On a weekly basis, though, The Thomson Reuters-Jefferies CRB index had its biggest tumble in nearly four months after accounting for sharp losses from two sessions this week. The weekly slump came as copper prices plumbed two-month lows on fresh worries over Europe's banks despite the bullish German data that boosted oil. U.S. soybeans closed lower as players took profit on an early rally fueled by strong Chinese buying and a Brazil port strike that stalled grains shipments there. And while raw sugar and coffee's premium grade arabica rallied more than many other commodities, traders cautioned that excess supplies could weigh on their prices again. "The only thing that can drive prices higher from here would be maybe macro sentiment. We are not expecting this to come from fundamentals," Andrey Kryuchenkov, an analyst at Moscow's VTB Capital, said in a comment about sugar. After sliding steadily for eight sessions, the CRB settled up 0.2 percent. Twelve of the 19 markets tracked by the commodities bellwether rose, with natural gas, nickel, gasoline, raw sugar and arabica coffee gaining more than 1 percent each. For the week, CRB ended down 1.7 percent, its sharpest slide since the week ending Oct. 26. Commodity markets started 2013 strongly, with the CRB rising 3 percent in January on signs of better economic recovery in the United States, Europe and China. But uneven business and growth data in the past two weeks raised market jitters, forcing the CRB to close lower on Feb. 11 through Feb. 21. OIL TICKS UP WITH STOCKS In Friday's session, crude oil followed equity markets higher after data showed Germany's business morale grew at its fastest pace in over two years in February. Wall Street's key stocks index, the S&P500 , was up 0.7 percent by 3.30 p.m. ET (2030GMT), rising for the first time in three sessions. Oil's benchmark Brent crude in London settled at $114.10, up 0.5 percent on the day and down 3 percent on the week. U.S. crude finished at $93.13, up 0.3 percent on the session and down 2.8 percent on the week. The selloff in oil earlier this week came after rumors on Wednesday that a commodities hedge fund was in trouble and liquidating positions. It accelerated on speculation the U.S. Federal Reserve may end its bond-buying program, which has provided liquidity to financial markets, sooner than previously thought. Copper slipped to its lowest level in 2 months and showed its biggest weekly loss in 14 months after the European Central Bank announced crisis loan repayments by euro zone banks at levels far below market expectations. Three-month copper in London closed at $7,805 a tonne, down from Thursday's close of $7,860. Copper, used in power and construction, fell 5 percent on the week for its biggest weekly fall since mid-December 2011. On Thursday, it suffered its biggest one-day slide of 2013. Prices at 3:23 p.m. EST (2023 GMT) LAST/ NET PCT YTD CLOSE CHG CHG CHG US crude 93.28 0.44 0.5% 1.6% Brent crude 114.20 0.68 0.6% 2.8% Natural gas 3.291 0.045 1.4% -1.8% US gold 1572.40 -5.80 -0.4% -6.2% Gold 1575.81 0.15 0.0% -5.9% US Copper 353.30 -2.00 -0.6% -3.3% LME Copper 7801.00 -60.00 -0.8% -1.6% Dollar 81.454 -0.007 0.0% 6.1% US corn 690.25 -0.50 -0.1% -1.1% US soybeans 1461.25 -26.50 -1.8% 3.0% US wheat 715.00 -6.25 -0.9% -8.1% US Coffee 143.10 1.35 1.0% -0.5% US Cocoa 2161.00 18.00 0.8% -3.4% US Sugar 18.24 0.12 0.7% -6.5% US silver 28.460 -0.239 -0.8% -5.8% US platinum 1607.40 -12.60 -0.8% 4.5% US palladium 735.30 1.70 0.2% 4.5%
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