New York: Copper rose, capping the biggest monthly gain since August, after a report showed the US economy grew at the fastest pace in more than six years in the fourth quarter and the dollar slid.
Gross domestic product rose at a 5.9 per cent annual rate at the end of 2009, the Commerce Department said on Friday. The dollar fell for a third day against a basket of six major currencies. Copper prices have more than doubled in the past year as the weaker greenback boosted investor interest and consumption increased as the economy recovered.
"Demand for commodities is going to continue to be strong," said William O'Neill, a Logic Advisors partner in Upper Saddle River, New Jersey. "The uptrend in copper will continue and we'll see higher prices as we move through the year."
Other markets
In other markets, cotton rose, capping the biggest monthly gain in two years, as demand by textile mills and investors increased. Crude oil also climbed. The UBS Bloomberg Constant Maturity Commodity Index advanced 1.8 per cent to 1,289.23.
Copper futures for May delivery jumped 7.4 cents, or 2.3 per cent, to $3.284 a pound on the Comex division of the New York Mercantile Exchange, the biggest gain for a most-active contract since February 16.
The metal surged 7.6 per cent in February, rebounding from an 8.8 per cent decline in the previous month.
Cotton futures for May delivery rose 1.29 cents, or 1.6 per cent, to 82.46 cents a pound on ICE Futures US in New York. Earlier, the price reached 82.58 cents, the highest level since June 27, 2008. This month, the fibre jumped 19 per cent, the most since February 2008.
US exporters sold 231,000 bales in the week ended February 18, a high for the year that began August 1, the government said on Thursday. In the two weeks ended February 23, hedge funds and other large speculators increased bets on rising prices by 77 per cent, government data show.
"We've got kind of a perfect-storm scenario going on," said Tom Reardon, the owner of Delta Brokerage in New York. "The trades and speculators are trying to buy the market at the same time."
Since February 9, the average of the five cheapest prices at Far East ports has risen 11 per cent on demand by spinners and weavers.
"They have been actively buying cotton in the cash market and our crop is on the small side," Reardon said.
Crude oil
Crude oil rose on the US GDP report, signalling that fuel demand may climb in the world's biggest energy-consuming country.
"The positive GDP number is putting upward pressure on prices," said Peter Beutel, the president of trading adviser Cameron Hanover Inc in New Canaan, Connecticut. "We are going to be focused on anything that gives an indication of where the economy is going."
Crude-oil futures for April delivery rose $1.49 to $79.66 a barrel on the Nymex. The price advanced 9.3 per cent this month.
gain
Gold close to $1,120
Gold rose toward $1,120 an ounce on Friday, posting its first monthly gain since November, as the metal benefited from economic uncertainties and signs that US interest rates would remain low in the near term.
Federal Reserve chairman Ben Bernanke damped speculation that US rates will rise soon, and the International Monetary Fund's announcement to begin the sale of 191.3 tonnes of gold also improved gold market sentiment. In February, bullion climbed about 2 per cent in the face of a resurgent dollar, as fiscal fears about Greece and some European countries boosted the greenback. "The reality is that the sovereign risk in Europe is very high. Ultimately, in my opinion, gold will divorce itself from following the day-to-day movement of the euro," said Bill O'Neill, partner at Logic Advisors.
Gold, traditionally seen as a safe haven in economic chaos, has been moving in tandem with asset classes that are perceived riskier in nature, taking the lead from equities and other commodities such as oil.
