Commodities rebound as $US rally haltsTOP NewsWall St: Techs up,...

Commodities rebound as $US rally halts
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Reuters

NEW YORK -- Commodities rebounded from the sharp decline of the last session as the dollar paused on its rally against the euro, boosting the appeal of raw materials priced in the US currency.

Bulls in US crude oil regained some traction when the market rose more than $US1 during the session before closing off its highs, after Friday's slump of $US4.

Precious metals, such as gold and silver, rode the coat-tails of the weaker dollar and stronger oil to close up as well. Industrial metals like copper and aluminium ended three straight days of falls on concerns over tightening supply.

On the agricultural side, US soybean futures surged more than 2 per cent amid good export demand for American soy as a farmers' strike in Argentina paralysed trade in one of the world's largest exporters of that oilseed.

As a broad gauge of commodity markets, the Reuters-Jefferies CRB index, which tracks of prices of 19 raw materials futures, rose 1.03 per cent to 422.17.

Some analysts and traders in commodities, however, told Reuters that the strong investment inflows the markets had seen for months may start waning if US interest rates stabilized and pulled the dollar higher.

"This will definitely apply pressure across the whole commodities universe," said Gavin McGuire, analyst and trader at Chicago's Iowa Grains.

Federal funds futures on Friday indicated a 98 per cent chance that the US Federal Reserve will hold key interest rates at 2 per cent when it meets June 25. Those rates stood at 5.25 per cent in September before the Fed began cutting them to help the US economy from the ravages of the credit crisis.

US crude on the New York Mercantile Exchange, or NYMEX, settled up 73 cents at $US127.35 a barrel after trading as high as $US128.30.

NYMEX crude prices have doubled since the summer of 2007, reaching a record high of $US135.09 last week. The market has retreated since on growing signs that global energy demand growth was slowing under the strains of high costs and economic turmoil in the United States.

Investors in oil were also spooked by news on Thursday that the U.S. futures market regulator was stepping up surveillance of energy trading to better track down speculators accused of manipulating prices.

US gold futures for August settled up $US9.80, or 1.1 percent, at $US891.50 an ounce on the COMEX division of NYMEX. COMEX silver for July closed up 35.0 cents, or 2.1 per cent, at $US16.865 an ounce.

In industrial metals, COMEX copper for July ended up 4.75 cents at $US3.6060 a lb. Copper for delivery in three months on the London Metal Exchange, or LME, rose $US45 to $US7,935 per tonne.

Copper prices rose as stocks of the metal in LME warehouses declined by 1,450 tonnes to 124,950 tonnes on Friday, reaching only about 2.5 days of estimated world consumption.

Among agricultural markets, soybeans for July delivery on the Chicago Board of Trade settled up 40-3/4 cents at $US13.63-1/2 per bushel.