Commodity prices rally as US dollar slides against euro

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Commodity prices rallied this week as the US dollar weakened against the euro in reaction to global efforts to tackle an escalating eurozone debt crisis, analysts said. The US dollar won back some ground on Friday as traders booked profits ahead of next week’s EU summit and after official data showed the US unemployment rate dropped to 8.6 percent last month, its lowest level since March 2009.
Raw material prices, like equities, were buoyed this week after the central banks of the US, the eurozone, Britain, Japan, Canada and Switzerland cut the cost of providing US dollars to banks, giving more liquidity to financial markets. Commodity prices also won support after China unexpectedly cut its ratio of obligatory bank reserves, in its strongest move yet to ease restrictions on lending.
“In the current environment, external markets, attitudes towards risk and views on the global economy are likely to stay in the driver’s seat” as far as commodities are concerned, Barclays Capital analysts said in a note to clients. “This week has seen progress surrounding the eurozone debt crisis ahead of the … EU summit next week,” they wrote.
OIL: Prices rose as the euro rallied against the US dollar. A weaker greenback makes US dollar-denominated commodities like oil cheaper for buyers holding stronger currencies, lifting demand and prices of raw materials. Crude futures also rose this week on international tensions over major oil exporter Iran. The EU, piling pressure on Iran after an attack on the British embassy, beefed up sanctions on Thursday over Tehran’s nuclear program and threatened to hit its oil and finances next. By late Friday on London’s Intercontinental Exchange, Brent North Sea crude for delivery next month rose to $108.92 a barrel from $106.11 a week earlier.
On the New York Mercantile Exchange, West Texas Intermediate (WTI) or light sweet crude for next month jumped to $100.26 a barrel from $96.06.
PRECIOUS METALS: Gold, seen as a safe haven in times of economic uncertainty, led the precious metals complex higher.
By late Friday on the London Bullion Market, gold advanced to
$1,747 an ounce from $1,688.50 the previous week.
Silver jumped to $33.15 an ounce from $31.24.
On the London Platinum and Palladium Market, platinum rose to $1,559 an ounce from $1,529. Palladium rallied to $653 an ounce from $572.
BASE METALS: Industrial metals prices mainly rallied, with copper gaining 8 percent. By late Friday on the London Metal Exchange, copper for delivery in three months rose to $7,883 a tonne from $7,276 the previous week.
Three-month aluminum rose to $2,145 a tonne from $2,004.
Three-month lead increased to $2,120 a tonne from $1,994.
Three-month tin declined to $19,800 a tonne from $20,600.