Metals prices rise on European bailout fund news

AP News
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Posted: Oct 24, 2011 4:00 PM
Metals prices rise on European bailout fund news

Precious metal prices are rising on expectations that European finance ministers could implement a bailout package worth more than $1 trillion.

Gold for December delivery rose $16.20, or 1 percent, to settle at $1,652.30 an ounce. December silver was up 45.1 cents, or 1.45 percent, to close at $31.644.

Precious metals prices have been affected by headlines out of Europe about talks to resolve the region's debt crisis. Gold and silver have risen when a sweeping European bailout plan for heavily indebted countries like Greece and the region's banks seems closer.

Investors fear that a big bailout program could lead to inflation, which would increase the appeal of hard assets like precious metals. Traders often buy those metals when they are worried about inflation.

On Monday, German officials said a European bailout fund might have its lending capacity increased to more than $1.39 trillion. The European Financial Stability Fund can currently lend about $600 billion.

German parliamentary leaders said Chancellor Angela Merkel informed them that the EFSF's lending powers will be boosted significantly.

Industrial metals and oil prices also rose. Those metals are up because traders think demand could increase for raw materials like copper and platinum of the European financial crisis is contained.

The price of copper for December delivery surged 22.6 cents, or 7 percent, to settle at $3.449 a pound. December palladium rose $20.25, or nearly 3.3 percent, to $638.50 an ounce.

January platinum gained $32.80 to finish at $1,542 an ounce.

December wheat gained 10.5 cents to finish at $6.425 per bushel. December corn gained 1.75 cents to end at $6.51 per bushel. November soybeans rose 14.5 cents, or 1.2 percent, to finish at $12.2675 a bushel.

Oil prices rose on optimism that economic growth will gain strength in the United States and Asia. As those economies grow, energy demand will increase. Benchmark oil rose $3.87 to $91.27 per barrel on the New York Mercantile Exchange.

Heating oil rose 3.83 cents to finish at $3.0542 per gallon, gasoline futures rose 1.21 cents to close at $2.6703 per gallon and natural gas lost 0.25 cents to close at $3.604 per 1,000 cubic feet.

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