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Thursday, Sep 6, 2012 8:30 PM UTC

Europe’s bond-buying plan benefits commodities

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Topics: From the Wires,

A new bond-buying plan to help ease Europe’s debt crisis is benefiting commodity prices.

The European Central Bank said Thursday that it will buy unlimited amounts of government bonds from countries struggling with massive debt. That should make it cheaper for them to borrow money.

Gold topped $1,700 per ounce for the first time in six months after the news was announced. Prices for oil, silver, wheat and corn also rose.

The bank’s announcement was the first of two major developments that commodities traders have been anticipating this week. Up next is Friday’s report on the U.S. job market. Economists predict it will show employers added 135,000 jobs last month. The unemployment rate is expected to stay unchanged at 8.3 percent.

If the numbers prove disappointing, analysts say it could raise expectations that the Federal Reserve will approve additional measures to aid the U.S. economy. That likely would lead to higher prices for most commodities.

After the bank’s announcement, traders bought gold as a hedge against inflation. They also are concerned about the impact of higher prices for food, gasoline and oil, said George Gero, a vice president at RBC Global Futures.

Gold for December delivery rose $11.60 to finish at $1,705.60 per ounce and December silver rose 34.5 cents to $32.674 per ounce.

Other commodities rose on expectations that demand could pick up if the global economy grows stronger.

Benchmark oil gained 17 cents to end at $95.53 per barrel after hitting $97.71 per barrel earlier in the day. Heating oil increased 2.49 cents to $3.1425 per gallon, gasoline rose 4.12 cents to $2.991 per gallon and natural gas fell 1.9 cents to $2.776 per 1,000 cubic feet.

Industrial metals were mixed. October platinum gained $10.80 to end at $1,586.40 per ounce, December palladium increased 80 cents to $647.75 per ounce and December copper fell 1.25 cents to $3.5165 per pound.

In agricultural contracts, December wheat rose 24 cents to finish at $8.9175 per bushel, December corn increased 7.75 cents to $7.985 per bushel and November soybeans dropped 0.5 cent to $17.47 per bushel.

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