New York: Oil prices rallied to nine-month highs and gold prices rose on Friday after news that the United States had authorised sending US weapons to Syrian rebels sparked concerns about rising geopolitical tensions in the Middle East.

Raw sugar on ICE Futures US jumped more than 3 per cent on a short-covering rally, while cocoa extended recent losses and fell 2.5 per cent.

Wheat futures hit their lowest in more than two months as the harvest advanced in the southern US Plains. New-crop corn and soybean futures eased on ideal growing conditions.

Escalating tensions in the Middle East lifted commodities as did US data suggesting the world’s biggest economy is on a moderate growth path, which would boost raw materials demand.

The Thomson Reuters-Jefferies CRB index, a commodities bellwether that tracks 19 markets, rose 0.31 per cent. But it was down 0.5 per cent on the week.

Wall Street stocks fell for the third day in four.

Attention will shift to a Federal Reserve policy meeting next week for signs of when the US central bank plans to scale back its monthly $85 billion bond purchase programme.

Most economists expect the Fed to scale back its bond purchases by year-end, a Reuters poll showed.

“Markets are looking at next week’s Fed meeting to be the big driver in the short-term,” said Kim Forrest, senior equity research analyst at Fort Pitt Capital Group in Pittsburgh.

OIL UP ON MIDDLE EAST UNREST

Front-month Brent crude futures settled 98 cents higher at $105.93 per barrel, the highest settlement price since April 9, after touching a session high of $106.64.

Brent, which had been bouncing between $99 and $105 for the past eight sessions, settled up 1.3 per cent on the week.

US. oil settled $1.16 higher at $97.85 per barrel, the highest settlement since late January, after touching a nine-month high of $98.25. It was up 1.9 percent on the week.

President Barack Obama authorised arming rebels in Syria after the White House said it had proof the Syrian government had used chemical weapons against them.

Although Syria is not a key global oil supplier, investors worry that an escalating civil war could lead to unrest in oil-producing regions of the Middle East, which pumps more than a third of the world’s oil.

Russian Foreign Minister Sergei Lavrov said more US military support for rebel Syrian forces could stoke violence in the Middle East.

US. crude also garnered some strength from data this week that showed stronger-than-expected retail sales and a fall in weekly jobless claims.

 

Resilient demand for coins and bars and a pullback in the US equities market lifted gold on the day and for the week.

Traders said Middle East tensions also boosted the metal’s safe-haven appeal. Western diplomats said the United States is considering setting up a no-fly zone in Syria, which would represent its first intervention in that civil war. The White House said Syria had crossed a “red line” by using nerve gas.

The precious metal rose about 0.3 per cent on the week, its third weekly rise in the last four weeks following a historic two-day selloff in mid-April.

“We’ve seen volume remain strong after it dramatically picked up starting in the middle of April,” said Scott Carter, CEO of precious metals dealer Lear Capital, adding that the sharp price drop prompted investors to add physical gold and silver positions.

Spot gold XAU= ended the day up 0.7 per cent at $1,390.2 an ounce.

 

SUGAR JUMPS, COCOA SINKS

ICE raw sugar futures surged to post their largest daily gain since November on a short-covering rally, while cocoa futures sank under pressure from technical weakness and expectations of ample supplies.

July raw sugar on ICE Futures US. jumped 0.54 cents, or 3.2 per cent, to settle at 16.78 cents per lb in technically-driven dealings after prices sank to 16.17 cents on Thursday, the lowest level for the front month since July 2010.

It was the front month’s steepest one-day gain in seven months, pushing sugar to a weekly gain of about 2 per cent after five weeks of losses.

“The specs are starting to cover this big short position, and they’re not getting as much help from the cash market,” said Jack Scoville, vice president for Price Futures Group in Chicago.

Data this week showed Brazilian mills were diverting more cane to ethanol over sugar production, expected to help whittle down huge supplies of sweetener.

September cocoa futures on ICE dropped $57, or 2.5 per cent, to finish at $2,253 a tonne, leaving the second-month contract down almost 5 per cent from last Friday’s close in its largest weekly loss since late January.

Dealers attributed the fall to favourable crop weather in West African growing regions and chart weakness.