Jan. 26 (Bloomberg) -- Commodities rose to the highest level in two weeks as copper and oil jumped on speculation that Federal Reserve plans to keep U.S. interest rates near a record low will bolster investor demand.
The Standard & Poor’s GSCI Index of 24 commodities gained 0.9 percent to 667.54 at 1:34 p.m. in New York. Earlier it reached 671.58, the highest level since Jan. 10.
Oil futures advanced as much as 2 percent after the Fed’s announcement sent the dollar to its lowest in more than a month against the euro, making assets priced in the U.S. currency more attractive. The Federal Open Market Committee said yesterday it expects its benchmark interest rate to stay “exceptionally low” at least until late 2014. A halt of Iranian oil supplies may boost crude by as much as $30 a barrel, the International Monetary Fund said.
“It’s a big commitment from the central bank,” said Sintje Boie, an analyst at HSH Nordbank AG in Hamburg, who correctly predicted in November that oil prices would slide by year-end. “For the markets, it’s a liquidity thing. All this liquidity must go somewhere, and so we have some money also going into oil. Prices are higher because of this bubble of liquidity.”
Copper for March delivery rose for a fourth day in New York, adding 1.8 percent to $3.8965 a pound at 12:13 p.m. on the Comex in New York. It reached $3.9105, the highest level since Sept. 19, and topped the 200-day moving average for the first time since August. Copper for three-month delivery rose 2.3 percent to $8,573.50 a metric ton in London. Tin climbed the most since Aug. 3, 2009.
Gold climbed to a seven-week high on speculation that the Federal Reserve’s pledge to keep interest rates low will drive the dollar lower and boost demand for precious metals as an alternative asset. Gold for April delivery jumped 1.3 percent to $1,724.70 an ounce at 12:23 p.m. in New York after climbing to $1,734.50, the highest price since Dec. 8.
Wheat advanced for a sixth day to the highest price in more than three weeks as Russia may have to slow shipments of the grain as exportable supply declines. Corn and soybeans gained.
Wheat stockpiles held by farmers in Russia’s main exporting regions in the south have dropped below last year’s levels, declining as much as 50 percent in some areas, SovEcon, a Moscow-based agricultural researcher, said yesterday. The country banned exports in August 2010 after its worst drought in half a century. The ban was lifted in July.
“Russia could potentially put some export curbs in place, but nothing is for certain,” said Sudakshina Unnikrishnan, an analyst at Barclays Plc in London. “For grains we have quite a bit of fundamental support.”
Wheat for March delivery climbed 2.9 percent to $6.565 a bushel at 12:24 New York time on the Chicago Board of Trade. The price rose to $6.5825 earlier, the highest since Jan. 4.
--With assistance from Grant Smith and Tony C. Dreibus in London and Ramsey Al-Rikabi and Luzi Ann Javier in Singapore. Editors: Rob Verdonck, Rachel Graham
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