COMMODITIES-Gold soars 3 pct on U.S. govt deal, oil drops on industry data

Thu Oct 17, 2013 5:02pm EDT

* USDA cancels October crop supply/demand reports
    * Gold rallies as U.S. budget deal seen delaying stimulus
cuts
    * U.S. oil futures slide to 15-week low as supplies increase

    By Carole Vaporean
    NEW YORK, Oct 17 (Reuters) - Grains and gold prices rose on
Thursday, while most other commodities fell despite the dollar's
drop and the resolution of a U.S. budget deal, with U.S. oil
prices sliding to their lowest since July after industry data
showed supply on the rise.
    Gold held onto 3 percent gains throughout the session as the
dollar tumbled on Thursday following the U.S. congressional deal
to restart the government and avoid a federal debt default.
    Late on Wednesday, the U.S. Congress approved an 11th-hour
deal to end a partial government shutdown and pull the world's
biggest economy back from the brink of a debt default that could
have threatened financial calamity. 
    The precious metal rode up to a 10-day peak, driven by the
dollar's declines and the belief that a temporary deal to avoid
an historic U.S. debt default might prompt the Federal Reserve
to delay tapering its monetary stimulus program. 
    Spot gold rallied to a session high of $1,324.06 per ounce
, up more than 3 percent on the day. By 3:55 a.m. EDT
(1955 GMT), it was still up 2.98 percent at $1,319.21. December
COMEX gold futures hit a high of $1,324.20 and settled up
$40.70 at $1,323, a near 3 percent gain, with trading volume
about 30 percent above its 30-day average, Reuters data showed.
    "The U.S. debt deal is seen (as) positive for gold, since
the whole mess is just being postponed by three to four months,
which makes a reduction of Fed asset purchases rather unlikely
for the time being," Commerzbank analyst Carsten Fritsch said.
    The dollar slid to its lowest in more than eight months
against the euro as currency markets focused on the impact of
the government shutdown and the likelihood that Federal Reserve
stimulus will stay in place. 
    The deal did not resolve the fundamental issues of spending
and deficits that divide Republicans and Democrats.
    The two-week shutdown and acrimonious debate over raising
the U.S. debt ceiling have knocked investor and business
confidence, denting growth prospects for the world's largest
economy, analysts said. 
     "Increasingly I'm of the view that the reason why our
economy can't kick into a higher gear is because of the
uncertainty created by Washington," said Mark Zandi, chief
economist of Moody's Analytics. 
    In the Thomson Reuters-Jefferies CRB benchmark, 12
of 19 commodities fell. The index lost 0.41 percent, with losses
in energy, industrial metals, and some agricultural markets.
    Brent crude oil fell 1.7 percent to a one-week low. U.S.
futures slid to their lowest since early July, as stockpiles in
the Cushing, Oklahoma oil hub reversed a months-long decline and
as signs of progress in talks over Iran's nuclear program
pressured prices. 
    Front-month December Brent crude settled $1.48 lower
at $109.11 per barrel. U.S. oil ended $1.62 per barrel
lower at $100.67, the lowest settlement price since July 2.
    "We have an enormous amount of crude oil production
worldwide, especially here, and tepid demand growth," said Sarah
Emerson, managing director of Energy Security Analysis Inc in
Wakefield, Massachusetts. "We're in a surplus market and that
surplus is definitely going to start weighing on prices."
    U.S. soybean futures staged their strongest rally in five
weeks and wheat posted the steepest gain in a week, spurred by
technical and bargain buying as the U.S. government returned to
work and the dollar fell.  
    USDA said it was cancelling a delayed release of the October
crop production report originally scheduled for Oct. 11 because
there has not been enough time to gather data. The next USDA
crop report is set for release on Nov. 8.    
 Prices at 11:44 a.m. EDT (1544 GMT)                         
 
                               LAST      NET    PCT     YTD
                                         CHG    CHG     CHG
 US crude                    100.34    -1.96  -1.9%    9.3%
 Brent crude                 109.30    -1.29  -1.2%   -1.6%
 Natural gas                  3.755   -0.014  -0.4%   12.1%
 
 US gold                    1318.90    36.60   2.9%  -21.3%
 Gold                       1319.06    38.07   3.0%  -21.2%
 US Copper                     3.29    -0.02  -0.6%   -9.9%
 LME Copper                 7223.00   -37.00  -0.5%   -8.9%
 Dollar                      79.708   -0.762  -1.0%    3.8%
 CRB                        286.338   -1.261  -0.4%   -2.9%
 
 US corn                     443.50     0.75   0.2%  -36.5%
 US soybeans                1289.75    13.25   1.0%   -9.1%
 US wheat                    691.75    10.25   1.5%  -11.1%
 
 US Coffee                   114.45    -1.40  -1.2%  -20.4%
 US Cocoa                   2768.00    21.00   0.8%   23.8%
 US Sugar                     18.97    -0.04  -0.2%   -2.8%
 
 US silver                   21.880    0.006   2.6%  -27.6%
 US platinum                1429.90    31.70   2.3%   -7.1%
 US palladium                733.35    19.80   2.8%    4.3%