July 11, 2013 / 4:16 PM / 5 years ago

COMMODITIES-Copper, gold lead rally on Fed hopes; oil sinks

* Multiweek highs in gold, copper in extended reaction to
    * Oil falls, breaking from initial rally, after bearish IEA
    * Wheat, cocoa and arabica coffee join broad run-up

 (Updates with session close in crude oil and crop markets)
    By Barani Krishnan
    NEW YORK, July 11 (Reuters) - Copper and gold prices surged
on Thursday on signs the U.S. Federal Reserve may maintain
economic stimulus longer than investors had expected, but oil
fell after a forecast for high global supplies of crude.
    In crop markets, wheat prices settled up for a fourth
straight session as investors covered short positions after the
U.S. Department of Agriculture lowered its forecasts for U.S.
and global wheat stockpiles below trade expectations. Cocoa and
arabica coffee futures also rose.  
    Copper hit its highest level in nearly a month and gold
jumped to its highest in nearly three weeks as the dollar fell
again against the euro and the yen, providing a further boost to
commodities priced in the greenback. 
    The 19-commodity Thomson Reuters-Jefferies CRB index
 hit a three-week high before retreating to show just a
slight gain from Tuesday's close after the drop in U.S. crude
oil, its main component.
    Copper's benchmark three-month futures contract 
closed up 2.6 percent, or $175, at $7,000 a tonne on the London
Metal Exchange. It jumped more than 3 percent during the session
to 7,049.25 a tonne, its highest level since June 18.
    U.S. gold futures for August delivery settled up 2.6
percent at $1,279.90 an ounce on New York's COMEX exchange. It
had rallied as much as 4 percent earlier to a 2-1/2 week high of
$1,297.20. The spot price of gold was up 1.8 percent at
above $1,286 by 4:24 p.m. EDT (2024 GMT). 
    The dollar slid a day after the Fed released minutes from
its June meeting, showing many policymakers wanted more signs of
U.S. job market improvement before cutting the central bank's
bond purchases. 
    After the release of the minutes, Chairman Ben Bernanke said
the Fed would continue an accommodative monetary policy given
tame inflation and a fragile labor market. 
    The minutes and Bernanke's remarks changed the view of many
investors, who had expected the Fed to start paring from
September its monthly commitment to buy $85 billion of bonds.
    Data from the U.S. Labor Department on Thursday showed the
number of Americans filing new claims for unemployment benefits
rose last week, a potentially worrisome sign despite continued
recovery in the labor market. 
    "We suspect that when the time comes in September, the Fed
will indeed start to remove portions of its $85 billion/month
purchase program, especially if the economy maintains its
current growth trajectory," Edward Meir, a base metals analyst
at INTL FCStone in New York, wrote in his daily commentary.
    "However, investors are not discounting such a scenario just
yet, preferring to focus on the probability that the Fed will
keep its program in place for far longer."
    Wheat for September delivery settled up 0.6 percent
at $6.83 a bushel, after hitting a 2-week high of $6.90 a
bushel, in response to the U.S. Department of Agriculture's
slashing of output estimates in a monthly supply-demand report.
    The USDA cut its forecast for wheat ending-stocks in 2013/14
to 576 million bushels, from a June forecast of 659 million and
below average analyst estimates of 632 million.
    Benchmark Brent crude oil out of Europe's North Sea 
closed down 0.7 percent at below $107.73 a barrel, after
rallying to $108.84 initially, its loftiest level since April 3.
    U.S. crude slid 1.5 percent to $104.91 a barrel,
after peaking at $107.45 earlier. 
    The decline in oil prices followed a monthly supply-demand
report from the International Energy Agency, which said the
North American shale oil boom could spur the biggest rise in
non-OPEC crude supply growth in decades next year. Such a surge
would erode the market share of OPEC countries, the IEA said.
 Prices at 4:26 p.m. EDT (2025 GMT)      
                              LAST/      NET    PCT     YTD
                              CLOSE      CHG    CHG     CHG
 US crude                    104.60    -1.92  -1.8%   13.9%
 Brent crude                 107.52    -0.99  -0.9%   -3.2%
 Natural gas                  3.613   -0.067  -1.8%    7.8%
 US gold                    1279.90    32.50   2.6%  -23.6%
 Gold                       1286.56    22.92   1.8%  -23.2%
 US Copper                     3.18     0.08   2.7%  -12.8%
 LME Copper                 7000.00   175.00   2.6%  -11.7%
 Dollar                      82.704   -1.337  -1.6%    7.7%
 CRB                        286.678    0.506   0.2%   -2.8%
 US corn                     716.75     7.00   1.0%    2.6%
 US soybeans                1601.25     9.50   0.6%   12.9%
 US wheat                    679.25     7.25   1.1%  -12.7%
 US Coffee                   123.40     1.75   1.4%  -14.2%
 US Cocoa                   2239.00    61.00   2.8%    0.1%
 US Sugar                     16.10    -0.15  -0.9%  -17.5%
 US silver                   19.956   19.764   1.6%  -34.0%
 US platinum                1407.60    39.50   0.0%   -8.5%
 US palladium                718.20     4.40   0.6%    2.1%

 (Additional reporting by Manolo Serapio in Singapore; Editing
by Steve Orlofsky, David Gregorio and Andrew Hay)
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