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COMMODITIES-Gold snaps 2-day rally; oil extends losses
February 27, 2013 / 10:37 PM / in 5 years

COMMODITIES-Gold snaps 2-day rally; oil extends losses

* Gold falls 1 pct on U.S. stimulus, sequester worries
    * Oil down as stockpiles of US crude, gasoline rise
    * Sugar rebounds from 2-1/2 year low, soy up too
    * Cotton sees biggest one-day gain in 6 months

    By Barani Krishnan
    NEW YORK, Feb 27 (Reuters) - Gold snapped a two-day rally on
Wednesday as the Federal Reserve chairman gave no hints of new
U.S. economic stimulus and investors worried that deep
government spending cuts were in store for the world's No. 1
economy, and oil fell too on concerns about weakening demand.
    Copper held steady as the dollar posted its largest loss in
a month against the euro, raising buying potential in the
base metal among those holding the single European currency.
    Raw sugar ended higher after hitting 2-1/2 year lows
during the session. U.S. soybean futures rose too as
delays in getting to port recently harvested crops in Brazil
bolstered export demand for U.S. soy.  
    The Thomson Reuters-Jefferies CRB index settled
slightly lower on the day, losses limited by the higher close in
six of the 19 commodities on the index. Cotton led gains,
rising over 3 percent, or its most in six months, as mill buying
helped the market recover ground lost since a 9-month high last
    Gold fell 1 percent, nearly erasing all of the previous
session's gains, hit by disappointment over a lack of new
Federal Reserve stimulus and deflation worries over
across-the-board deep U.S. spending cuts.
    A rally in U.S. equities also weighed on gold's safe-haven
appeal, as bullion snapped a four-session winning streak a day
after Fed Chairman Ben Bernanke defended the central bank's
bond-buying stimulus policy.
    On Wednesday, Bernanke said the U.S. jobless rate is
unlikely to reach more normal levels for several years, but
there were few surprises in his second day of testimony to the
    Frank McGhee, head precious metals trader of Integrated
Brokerage Services LLC, said that the central bank's policy of
bond buying known as quantitative easing "is becoming less and
less effective as Bernanke announced nothing new."
    That brings the deflationary aspect of budget cuts known as
sequestration back to the forefront, McGee said.
    It is unlikely that Congress will act to stop the $85
billion in across-the-board cuts due to start Friday. The cuts,
mandated by a 2011 deficit reduction law, dent gold's
inflation-hedge appeal.
    The spot price of bullion was down to $1,597.21 an
ounce by 5:20 p.m. EST (2220 GMT), off a 1-1/2-week high of
$1,619.66 set on Tuesday.
    U.S. gold futures for April delivery were down
$19.80 to $1,595.70, with trading volume in line with their
250-day average, preliminary Reuters data showed.
    In oil, London's benchmark Brent crude fell to a four-week
low beneath $112 a barrel as the sixth straight weekly rise in
U.S. crude oil stockpiles and a sharp slide in gasoline prices
added to concerns about faltering demand.
    Inventories of crude oil in the United States rose by 1.1
million barrels in the week to Feb. 22, the Energy Information
Administration said in its weekly report. Gasoline stocks
slipped from high levels around the Gulf Coast refining center
but rose on the East Coast. 
    The U.S. gasoline benchmark futures contract led
Brent lower, falling by more than 12 cents to settle at $2.8565
a gallon.
    "Gasoline is coming down tremendously, which is going to
have an impact on refinery runs in Europe," said Dominick
Chirichella, senior partner at Energy Management Institute in
New York. "(That) suggests a bearish tone on crude oil demand
going forward."
    Brent shed 84 cents to settle at $111.87 a barrel,
hitting a low of $111.65, its weakest since Jan. 22.
 Prices at 5:25 p.m. EST (2225 GMT)      
                             LAST/      NET    PCT     YTD
                             CLOSE      CHG    CHG     CHG
 US crude                    92.85     0.22   0.2%    1.1%
 Brent crude                111.85    -0.86  -0.8%    0.7%
 Natural gas                 3.434   -0.022  -0.6%    2.5%
 US gold                   1615.20     0.00   0.0%   -3.6%
 Gold                      1596.15    -1.06  -0.1%   -4.7%
 US Copper                  354.50    -2.15  -0.6%   -2.9%
 LME Copper                7870.00    11.50   0.1%   -0.8%
 Dollar                     81.568   -0.302  -0.4%    6.3%
 US corn                    709.50     4.50   0.6%    1.6%
 US soybeans               1457.50     9.75   0.7%    2.7%
 US wheat                   704.25    -1.50  -0.2%   -9.5%
 US Coffee                  142.40    -0.50  -0.3%   -1.0%
 US Cocoa                  2142.00    16.00   0.8%   -4.2%
 US Sugar                    17.84     0.05   0.3%   -8.6%
 US silver                  28.943   -0.317  -1.1%   -4.2%
 US platinum               1600.10   -16.40  -1.0%    4.0%
 US palladium               743.15     3.75   0.5%    5.7%

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