* Late Tuesday vote in U.S. Congress empowers markets
* Expect strong tone this week, more volatility later
* Oil and copper hit 11-week highs, gold at 2-week peak
By Barani Krishnan
NEW YORK, Jan 2 Commodities prices made a
powerful start to the new year, with oil, gold and copper
hitting multi-week highs on Wednesday after the U.S. Congress
passed a bill to partially resolve a fiscal crisis in the
world's largest economy.
Sugar and coffee prices rose too as the dollar fell, making
commodities priced in the U.S. currency cheaper for euro and yen
holders, after a vote in the House of Representatives averted
tax increases for many Americans.
Congress decided late on Tuesday to raise taxes on wealthy
individuals and families, sparing middle- and low-income
earners. But it left unresolved another sticky issue involving
$109 billion in planned military and domestic spending cuts,
promising political showdowns on the budget in coming months.
Edward Meir, a commodities analyst at Intl FC Stone, said
Congress was "uninspiring" in its handling of the issue and
"failing to put anything on the table dealing with spending cuts
or entitlement reform, means that investors will likely see more
"For now, however, the buyers are firmly in charge of the
asylum," Meir wrote in a note. He expects a "stronger tone" for
the rest of the week.
Wheat and soybeans also began 2013 positively, although a
lack of follow-through buying pushed their prices lower. The two
markets were the biggest gainers last year, rising more than 18
OIL FURTHER BOOSTED BY CHINA, MIDDLE EAST
In oil trading, London's benchmark Brent crude
surged almost 2 percent to an 11-week high of nearly $113 per
barrel, before easing back to around $112 by 1700 GMT.
Brent averaged more than $111.65 per barrel last year, the
highest annual average on record, after geopolitical threats to
production offset worries about flagging oil demand. It finished
up 3.5 percent for 2011.
U.S. crude rose around 2 percent in Friday's session
to $93.87 a barrel, its highest since Sept. 21. It gained 7
percent through last year.
The U.S. fiscal deal aside, oil found support from robust
data out of China pointing to a recovery in the world's
second-largest economy and No. 2 oil consumer.
China's official manufacturing purchasing managers' index
held steady in December at 50.6, according to data issued on
Monday -- adding to evidence that its economy was picking up in
the last three months of 2012 after slowing for seven straight
Tensions in the Middle East -- which produces the bulk of
the world's oil -- helped crude prices as well.
Fourth largest oil exporter Iran was carrying out naval
drills in the Strait of Hormuz, a waterway Tehran has threatened
to block if it comes under military attack over its disputed
nuclear program. Some 40 percent of the world's sea-borne oil
exports pass the strait.
METALS DOMINATE COMMODITY GAINS
Copper, like oil, also hit 11-week highs, rising more than 3
percent to above $8,205 a tonne in London and nearly
$3.74 a lb in New York for the biggest daily rise since
September. Last year, copper finished up 4 percent.
Metals dominated gains on the 19-commodity Thomson
Reuters-Jefferies CRB index, with four of the top five
markets for the day being aluminium, nickel, silver and copper.
Aluminum and lead -- another industrial metal
used for battery making -- rose more than 4 percent each in
their biggest leap since September.
Part of those gains were driven by renewed confidence in the
economy in China, the world's largest buyer of metals.
"The other big thing for the metals market is a strong
rebound in China that could be underway; the data is pointing to
that. Sentiment is certainly risk-on," said Robin Bhar, a metals
analyst in London for Societe Generale.
In precious metals, gold rose about 1 percent to hover at
2-week highs of around $1,690 an ounce in both the spot
and U.S. futures markets.
In India, the No. 1 market for bullion, gold futures notched
their highest gains in two weeks after the finance minister
hinted at making imports more expensive, triggering speculative
buying from physical traders.
India's central bank has also asked that volume and value
restrictions be placed on gold imports by banks and agencies
such as MMTC to help rein in a current account gap,
which touched an all-time high in the July-September quarter.
Prices at 12:11 p.m. EST (1711 GMT)
LAST NET PCT YTD
CHG CHG CHG
US crude 92.85 1.03 1.1% -6.1%
Brent crude 112.10 0.99 0.9% 4.4%
Natural gas 3.203 -0.148 -4.4% 7.2%
US gold 1691.10 15.30 0.9% 7.9%
Gold 1690.35 15.81 0.9% 8.1%
US Copper 373.50 8.25 2.3% 8.7%
LME Copper 8200.00 269.00 3.4% 7.9%
Dollar 79.778 0.013 0.0% -0.5%
US corn 693.00 -5.25 -0.8% 7.2%
US soybeans 1410.00 -8.75 -0.6% 17.6%
US wheat 761.75 -16.25 -2.1% 16.7%
US Coffee 148.55 4.75 3.3% -34.9%
US Cocoa 2254.00 18.00 0.8% 6.9%
US Sugar 19.71 0.20 1.0% -15.2%
US silver 31.075 0.848 2.8% 11.3%
US platinum 1563.20 24.50 1.6% 11.3%
US palladium 709.30 5.95 0.9% 8.1%