COMMODITIES-Most markets lifted by falling dollar, easy money

Tue Apr 9, 2013 6:07pm EDT

* Most metals-precious and base, oil, grains and softs gain

* Silver, copper, corn among the biggest gainers

* Natural gas falls 1.2 percent on mild weather forecasts

By Carole Vaporean

NEW YORK, April 9 (Reuters) - Most commodities rallied on Tuesday as the dollar fell and China released data showing tame inflation, suggesting Beijing could maintain an easy monetary policy.

Silver jumped 2.7 percent and copper surged 2.1 percent, making the two metals the day's biggest climbers. Oil and gold were not far behind, helping push the Thomson Reuters-Jefferies CRB index up 0.63 percent.

The commodities bellwether was up 1.81 points at 289 by the end, lifted by closing gains in all but 4 of its 19 components.

"The idea that central banks are going to continue in their monetary policies and we'll see liquidity continue to expand makes commodities an attractive investment, and that's providing support for oil prices," said Gene McGillian, an analyst at Tradition Energy in Stamford, Connecticut.

Brent crude oil futures posted their biggest gain since late December. Brent May crude closed at $106.23 per barrel, up $1.57. U.S. May crude closed at $94.20 a barrel, an increase of 84 cents.

McGillian and other analysts said the weak dollar, the likelihood of an easy money policy continuing in China and other factors helped push money into metal, grains and softs markets.

The euro rose to $1.31, its highest since mid-March, making dollar-denominated commodities more affordable for holders of euros.

In China, government data showed inflation slowing. This eased concerns the Chinese central bank would have to tighten the money supply, which stoked commodities demand.

On Wednesday, the Federal Reserve's Federal Open Market Committee will issue minutes from its meeting of March 19-20. Investors will look to the report for clues on whether Fed officials were warming to the idea of scaling back their extremely easy money policy.

Gold rose, as volatility in the currency market triggered by Japan's aggressive monetary easing plan lifted bullion's appeal as a hedge against inflation and currency fluctuations.

Bullion climbed to a one-week high as the dollar fell against the euro and the yen, with the Japanese currency recovering from a four-year low set against the greenback earlier in the session.

In early business, the tame Chinese inflation readings boosted gold prices.

Silver was up 2.5 percent at $27.93 an ounce, its biggest one-day gain since early November.

Analysts said pent-up buying pushed gold up after it mostly failed to rally after the Bank of Japan pledged last week to inject about $1.4 trillion into the economy over two years.

"Gold is now slowly sinking in to the news that Japan is printing a quick deal of money and liquidity is going to be abundant again," said Axel Merk, chief investment officer of Merk Funds, which oversees $630 million in mutual fund assets.

Copper hit its highest since late March after the Chinese inflation data, which underpinned a steady but modest seasonal recovery in metal demand.

Three-month copper on the London Metal Exchange rose to $7,638 a tonne, its highest since March 28, before closing slightly lower at $7,625 a tonne.

Corn,, cocoa and soybeans also posted sharp gains, with each rising around 1.5 percent.

U.S. corn futures were up 1.7 percent as traders unwound bearish bets on the market ahead of a key government supply report, traders said.

May soybean futures, the market's front-month contract, , also rose in pre-report positioning, while wheat futures were mixed.

U.S. natural gas futures were the biggest losers, falling 1.2 percent after declining by a similar amount in previous session.

Gas prices fell as investors took profits amid mild weather forecasts for the eastern half of the nation, but concerns about below-average inventory levels limited the downside.

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