WASHINGTON (MarketWatch) -- Gold and other metals futures rallied Tuesday, boosted by sharp weakness in the U.S. dollar and broad strength in commodities, with copper prices soaring 9% and silver gaining 7%.
Gold for December delivery surged $31.60, or 4.4%, to $758.40 an ounce in electronic trading on Globex. The contract earlier hit an intraday high of $765.
On the Comex division on the New York Mercantile Exchange, December gold was up $33.70 at $760.50 an ounce.
"Gold, like the past few weeks, has been acting inversely to the dollar," said David Beahm, a vice president at precious metals retailer Blanchard & Co. "Today gold is up strong as the dollar has fallen."
The U.S. dollar fell sharply against other major currencies Tuesday, slipping as equity markets rose on a further bounce in risk appetite.
The dollar index , a measure of the greenback against a trade-weighted basket of six currencies, was at 84.649, down from 86.350 late Monday. See Currencies.
The "U.S. dollar is getting beaten up today ... sparking sharp buying in all commodities," said Darin Newsom, a senior analyst at DTN.
Copper rallies 9%
Copper and silver futures saw even stronger rallies. Copper for December delivery soared 11.5 cents, or 6.3%, to $1.955 a pound on Globex. December silver rose 65 cents, or 6.7%, to $10.40 an ounce.
"Copper has benefited this morning from a sharp decline in the dollar versus the euro, as well as stronger crude oil prices," said Nick Jonson, an associate editor of Platts Metals Week.
"But the rally may be due in part to pre-election anticipation and excitement," Jonson said. "Traders appear to be anticipating a rebound in the economy and overall demand if, as election polls suggest, one party will control both Congress and the presidency."
Millions of Americans began casting votes Tuesday morning for the next president of the United States, with Democrat Barack Obama leading rival John McCain in every poll.
The Democrats also appeared on the verge of expanding their majorities in the U.S. House and Senate. Read more.
Elsewhere in the commodity markets, oil futures climbed to a high near $70 per barrel on Globex. See Futures Movers.
The Reuters/Jefferies CRB Index , a benchmark gauging the prices of major commodities, rose 4.3% to 275.40 points.
Economics in play
On Wall Street, U.S. stocks rallied Tuesday, with the Dow Jones Industrial Average soaring as much as 300 points. See Market Snapshot.
Metals equities followed suit. The Amex Gold Bugs Index , which tracks the share prices of major gold companies, jumped 12%. The PHLX Gold & Silver Sector Index rallied 10.5%.
The SPDR Gold Trust rose 5.2% to $74.80 on the New York Stock Exchange.
The iShares Gold Trust rose 5% to $74.84, while the iShares Silver Trust ETF gained 7.2% to $10.31.
The Market Vectors-Gold Miners ETF gained 13.1% to $23.76.
"Even the most sanguine, tunnel-visioned bull would have to admit that the fundamentals of the U.S. economy are bad and deteriorating," said Mark O'Byrne, a director at Gold and Silver Investments Ltd.
In a note to clients, O'Byrne said he believes U.S. Sen. Barack Obama looks set to become the 44th U.S. president and "there is a hope that he may regain America's respect in the world with a return to more restrained and sane fiscal, economic and foreign policies."
But "the honeymoon is likely to be very short as the new president will face the greatest challenge since the Great Depression of the 1930s," O'Byrne said.
So for now, "deflationary pressures continue to be prevalent and central banks internationally continue to aggressively cut interest rates in an effort to stimulate credit growth and inflate their way out of a possible Depression," he said.
Also on Globex, December palladium rose 4.2% to stand at $210.85 an ounce.
January platinum gained $14.80 to $841.90 an ounce. Platinum, which is more expensive and more scarce than gold, has seen prices drop 46% so far this year, beating gold as one of the worst performers of the precious metals.
