Dip in dollar drives gold, other metals higher

AP News
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Posted: Dec 28, 2009 4:13 PM

Gold and other metals inched higher in light trading Monday as the dollar dipped against other currencies.

Energy and agriculture futures also rose as the ICE Futures U.S. dollar index, a widely used measure of the dollar against other currencies, slipped 0.1 percent. A drop in the dollar makes commodities more attractive to foreign buyers.

Commodities added to gains from late last week, but analysts warned that price movements could be exaggerated by low volume. Many traders are on vacation this week ahead of New Year's Day on Friday.

Gold for February delivery rose $3.10 to $1,107.90 an ounce on the New York Mercantile Exchange. Gold is up 25.3 percent for the year, but is down 9.7 percent from a record high of $1,227.50 on Dec. 3.

For much of this year, the dollar has been falling, sending commodities prices soaring. However, buying of commodities has tapered off in recent weeks as investors refrain from making big bets at the end of the year and lock in gains they've made during 2009.

Among other metals, March silver gained 12 cents to $17.56 an ounce, while January platinum rose $12.40 to $1,480.30 an ounce.

March copper futures jumped 4.4 cents to $3.3365 a pound, after earlier rising to $3.344 _ the metal's highest price since September 2008.

Elsewhere on the Nymex, benchmark crude for February delivery added 72 cents to settle at $78.77 a barrel. Prices rose above $79 earlier in the day, their highest in more than a month.

Energy futures have gained this month as snow and ice blanketed parts of the country and supplies dipped.

Heating oil climbed 3.79 cents to $2.0735 a gallon Monday, while gasoline added 2.88 cents to $2.0184 a gallon. Natural gas rallied 34.7 cents to $5.99 per 1,000 cubic feet.

Grain prices jumped on the Chicago Board of Trade. Darin Newsom, senior analyst at DTN in Omaha, Neb., said traders may be anticipating fresh money coming in to commodities markets at the beginning of the year as investors look to reallocate cash into riskier assets.

"It seems like some of the traders who are still on the floor ... might be trying to get ahead of that," he said.

March wheat futures rose 26.25 cents to $5.5075 a bushel, while March corn rose 7.5 cents to $4.16 a bushel.

Soybeans for March delivery jumped 30 cents to $10.38 a bushel.

Cotton and sugar futures also rose, while coffee and cocoa fell.