* Base metals, oil, gold and platinum extending gains
* Eyes on Fed for extra stimulus from policy meeting
* Grains await key USDA report on U.S. drought
By Veronica Brown
LONDON, Sept 12 Rallying metals and oil markets
picked up steam on Wednesday, with crude up for a fifth day and
gold hitting six-month highs, boosted by a German court's
approval of a euro zone bailout fund and hopes of more monetary
easing from the Federal Reserve.
Platinum also hit its highest point since early April
amid concern about spreading labour unrest in South Africa, the
metal's top producer.
German backing to the euro zone's new 700 billion euro
European Stability Mechanism boosted the bloc's ability to face
up to its debt crisis. The court's approval was a central
requirement for the European Central Bank's plan to buy the
bonds of struggling euro members.
With that decision taken, markets are positively positioned
for the Fed's two-day policy meeting. The expected announcement
of extra stimulus for a flagging U.S. economy was seen sparking
beneficial ripples through commodity markets.
"Once again the big question is QE (quantitative easing) or
not," said Gabriel Garcin, a portfolio manager at Europanel
Research & Alternative Asset Management in Paris, which invests
in European hedge funds and CTAs.
"If they do, it could really push up prices. Then once again
the drivers of commodity prices would shift from supply demand
fundamentals to more risk-on, buy everything that are risky
Brent crude for October delivery, which expires on
Thursday, was up 72 cents at $116.12 a barrel, on track for its
highest close since Aug 16.
Gold shot to $1,746.20 - its strongest in six months.
The metal has risen twice as many days as it has fallen in the
last calendar month, while copper and aluminium
were up for their fourth and ninth days respectively.
Other so-called risk markets got a shot in the arm from the
German court bailout decision, with global shares rising
, but Spanish and Italian bonds near the centre
of the financial storm were little changed.
METALS RIDE UP
In precious metals, spot platinum and the metal's price in
South African rand hit multi-month highs, with investors
prompted by spreading unrest in the country that controls around
80 percent of global output.
South African police said striking miners had blockaded
roads leading to shafts belonging to number one producer Anglo
The price has risen by nearly 20 percent since a strike at
number three producer Lonmin turned violent last month,
leaving 44 dead and dozens injured in clashes between police and
Yet a forecast surplus of metal stemming from faltering
demand from the European car industry could limit further price
gains, analysts said.
"The situation is delicate, very politically sensitive. But
we have to sit back and take a more neutral look at the market
and say this is all sentiment driven. It's debatable as to how
much of a sustained rise this will be once the dust has
settled," Societe Generale analyst Robin Bhar said.
GRAINS EYE DATA
Chicago soybeans rose from a three-week low, while
corn gained after two days of losses in positioning ahead
of key U.S. reports which will shed more light on damage caused
by a historic Midwest drought.
Funds have been liquidating bullish bets in the markets
heading into U.S. Department of Agriculture supply-demand and
crop production reports due at 1230 GMT on Wednesday.
"We are expecting a downgrade in soybean production which is
mainly based on the area assessment," said Luke Mathews, a
commodities strategist at the Commonwealth Bank of Australia.
"It will be the same scenario for corn, abandonment (of
acres) is likely to be revised higher for corn, resulting in
overall downgrade in production."
Looking at ways to tackle repeated food price spikes
stemming from volatile cereal markets in recent years, French
president Francois Hollande launched a global campaign to win
support for creating strategic stockpiles of agricultural