Commodity prices rose across the board Tuesday on hopeful economic news in Europe and an increase in new U.S. home construction.
The rally came after days of uneven prices for commodities because of concerns about whether Europe's debt crisis would hurt demand. Oil prices rose 3.4 percent, gold rose 1.3 percent, copper rose nearly 2 percent and wheat increased 1.3 percent.
In Europe, surveys showed that German business and consumer confidence rose unexpectedly in December. The Spanish government also completed a successful debt auction. Both helped ease some concerns about the lingering debt crisis.
The U.S. government said builders broke ground on 685,000 homes in November, a 9.3 percent increase from October. The news was viewed as encouraging for the troubled housing industry even though the total of new starts was far less than the 1.2 million that economists say would be built each year in a healthy housing market.
Commodities also benefited from a weaker dollar. Since commodities are priced in dollars, a weaker dollar can make them more of a bargain for traders who use other currencies.
Dave Meger, vice president of metals trading, at Vision Financial Markets, noted that investors still are concerned about how Europe will resolve its financial troubles and China's economic slowdown. A slowing global economy could hurt future demand for commodities from copper and oil to soybeans.
Gold for February delivery rose $20.90 to end at $1,617.60 an ounce. In March contracts, silver increased 66.2 cents to end at $29.536 an ounce, copper rose 6.1 cents to $3.3695 per pound and palladium increased $10.90 to $628.60 an ounce. January platinum ended up $19.30 at $1,432.90 an ounce.
Benchmark oil rose $3.19 to finish at $97.24 per barrel on the New York Mercantile Exchange. Heating oil increased 6.9 cents to end at $2.8494 per gallon, gasoline futures rose 8.96 cents to $2.5787 per gallon and natural gas increased 3.2 cents to $3.128 per 1,000 cubic feet.
March wheat rose 8 cents to finish at $6.0775 per bushel, March corn rose 6 cents to $6.07 per bushel and January soybeans rose 7.5 cents to $11.445 per bushel.