September 14, 2012 / 3:15 AM / 5 years ago

COMMODITIES-Copper, oil rise on Fed action; gold at 6-month top

* Fed to buy $40 bln of debt a month as focus shifts to jobs

* London copper jumps more than 3 pct to 4-month high

* Brent above $116, extends gains to 7th day

* Commodities in Shanghai, Tokyo surge

By Manolo Serapio Jr

SINGAPORE, Sept 14 (Reuters) - Gold, copper and oil hit multi-month highs on Friday after the U.S. Federal Reserve’s aggressive moves to stimulate the world’s top economy drove expectations of higher global demand for raw materials and a heightened need to hedge inflation risks.

The Fed said it will buy $40 billion worth of mortgage debt a month until the U.S. jobs market improves, reviving the appeal of risky assets that have suffered for months from uncertainty on the global economic outlook.

Commodities traded in Shanghai and Tokyo, including rubber and steel rebar, also surged as Asian shares rallied and the euro hit a four-month high against the dollar.

The positive impact of the Fed’s policy move, however, unless backed by a recovery in demand and economies in Europe and China, could prove fleeting, analyst say.

“The Fed’s move is certainly bullish for commodities, but I don’t think we want to assume that the bullishness in commodities is as open ended as the QE3 program itself,” said Vishnu Varathan, market economist at Mizuho Corporate Bank.

“The decisive thing is going to be a question of how things in the euro zone and China will pan out because if China’s demand doesn’t recover as quickly then a lot of this euphoria is going to fade.”

But Varathan said gold’s draw is likely to outlast other assets’ as investors brace for inflation.

Spot gold rose half a percent to a session high of $1,774.96 an ounce, adding to a 2 percent gain on Thursday, as the Fed’s open-ended debt purchase plan raised inflation concerns.

The Fed’s action suggests the U.S. central bank’s focus has shifted to reducing the unemployment rate from ensuring price stability, sharpening gold’s appeal as an inflation hedge.

“At least in the short to medium term, the Fed’s action will provide solid support for gold and help it test $1,800, or even $1,900,” said Li Ning, an analyst at Shanghai CIFCO Futures.

Copper was the biggest gainer among major commodities, with three-month copper on the London Metal Exchange rising more than 3 percent to $8,355 a tonne, its loftiest since May.

Gold is on course to extend its winning streak to a fourth straight week and copper to its second.


U.S. crude futures hit a session high of $99.14 a barrel, a level last seen in early May. Brent crude rose for a seventh straight session, peaking at $116.50, not far off a four-month top of $117.48 reached on Thursday.

Oil also got a lift from escalating anti-U.S. protests over a film demonstrators consider blasphemous to Islam.

Protesters attacked the U.S. embassies in Yemen and Egypt on Thursday, while the United States sent warships towards Libya, where the U.S. ambassador was killed in related violence this week. Demonstrations have also taken place in Kuwait, Iran, Bangladesh, Tunisia, Morocco and Sudan.

“The Middle East premium is starting to be thrown into the oil price a little bit, adding about $5 to the price,” said Jonathan Barratt, chief executive of BarrattBulletin, a Sydney-based commodity research firm.

“A lot of the dissident parties will use the film as a means to promote more unrest. As a result of that, I see it continuing for awhile.”

Gains in U.S. grains prices were much more modest, with corn rising the most at half a percent to $7.77-1/2 per bushel.

Despite the rise, corn is down nearly 3 percent for the week, its biggest weekly fall since mid-June, after the U.S. government’s corn harvest forecast this week beat analysts’ average estimate.

Tokyo rubber futures surged as much as 5.8 percent, while Shanghai rubber hit its upside limit and Shanghai steel rebar jumped almost 5 percent intraday. (Editing by Ed Davies)

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