Bloomberg News

Commodities Record Longest Rally in 10 Months After Gains in U.S. Economy

February 24, 2012

Commodities rose, capping the longest rally in 10 months, on signs of gains in the U.S. economy. Industrial metals and crude oil led the rally.

The Standard & Poor’s GSCI Spot Index of 24 raw materials rose 1.1 percent to settle at 715.52 at 3:45 p.m. New York time. The gauge climbed for the seventh straight session, the longest rally since April. Earlier, the measure reached 715.77, the highest since May 5.

An index of U.S. consumer confidence unexpectedly rose to a one-year high in February, and purchases of new homes in January topped forecasts by analysts, according to reports today. Jobless claims held at a four-year low, data showed yesterday. China may make more cuts to banks’ reserve requirements to fuel lending and sustain economic growth.

“The environment is ideal for commodities,” James Cordier, the founder of Optionsellers.com in Tampa, Florida, said in a telephone interview. “On one hand, the U.S. is growing, and on the other, China is making credit availability easier. People also expect the situation in Europe to improve.”

In the week ended Feb. 21, hedge funds and other money managers increased net-long positions, or bets on a rally, in 18 U.S. commodity futures and options to the highest since September, government data showed today. The dollar fell to an 11-week low against a basket of major currencies.

“A significantly lower dollar is helping commodities,” William O’Neill, a partner at Logic Advisors in Upper Saddle River, New Jersey, said in a telephone interview. “We have seen a general ‘risk-on’ mentality this week, which got a further boost with today’s U.S. data.”

This week, a gauge of aluminum, copper, nickel, lead, zinc and tin rose 5.1 percent, the most in a month. On Feb. 21, the measure climbed 2.8 percent, the most in six weeks, after Greece won a second bailout. China is the top metal consumer.

Crude oil capped the longest rally in two years amid escalating global tensions with Iran.

Oil futures for April delivery advanced 1.8 percent to $109.77 a barrel in New York, the highest settlement since May 3.

To contact the reporters on this story: Debarati Roy in New York at droy5@bloomberg.net;

To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net


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