Commodities rose for a seventh day to a two-year high, led by cotton and silver, on optimism about economic recovery and on a weaker dollar. Gold and tin climbed to records. The Standard & Poor’s GSCI Spot Index of 24 raw-materials futures reached 753.89 points, the highest level since Aug. 4, 2008. It was up 1.1 percent at 753.54 at 10:45 a.m. London time, for a weekly gain of 3 percent, on course for the biggest increase in five weeks. Silver for immediate delivery touched $40.235 an ounce, and cotton reached $2.124 a pound. “The move today is just another step in the longer-term story,” said Eugen Weinberg, head of commodity research at Commerzbank AG in Frankfurt. “Strong industrial demand, high economic optimism, a weaker U.S. dollar and ample liquidity continue to support commodity prices.” China, the world’s biggest copper consumer, can expand at 8 percent a year for the next two decades, the World Bank said March 23. Industrial use of silver may climb to a record this year, researcher GFMS said yesterday. The Federal Reserve last month stuck to plans to buy $600 billion of Treasuries, and the Bank of England yesterday maintained the size of bond purchases. Raw materials from soybeans to crude oil advanced, lifting lead and aluminum to the highest prices since 2008. Corn reached a 33-month high in Chicago trading yesterday. Slumping Dollar Prices also gained as the dollar weakened, stoking demand for commodities as an alternative investment and making raw materials priced in the currency cheaper in terms of other monies. The U.S. Dollar Index, a six-currency gauge of the greenback’s strength, fell as much as 0.6 percent to the lowest level since December 2009. “All commodities are much higher, irrespective of fundamentals,” Walter de Wet, head of commodities research at Standard Bank Plc in London, said by telephone. “Clearly there is a common factor, and it seems to be the dollar.” The dollar dropped to the lowest since January 2010 versus the euro after the European Central Bank yesterday boosted borrowing costs for the first time in almost three years to combat inflation. “Crude oil, of course, is pushing higher on the back of Middle East, gold and silver are moving on inflationary concern, and base metals are also finding support in what we see is a combination of short-covering and the dollar,” de Wet said. “Looking at the way the dollar is weakening, I think we might test a bit higher for commodities.” Short-covering denotes reversals of bets on declining prices. Borrowing Costs China’s central bank on April 5 raised interest rates for the fourth increase in less than six months, acting before a report forecast to show consumer prices climbed 5.2 percent last month from a year before, the fastest pace since 2008. Interest- rate futures imply that investors expect two more ECB rate increases by the end of the year as inflation speeds up. Crude oil for May delivery was last up 1.2 percent at $111.62 a barrel on the New York Mercantile Exchange after reaching $111.68. Prices climbed as a fire burned at Libya’s Sarir field, bolstering concern unrest in North Africa and the Middle East will further reduce supply. Silver climbed 1.4 percent to $40.205 an ounce, the highest level since Feb. 11, 1980, in London. Gold rose 0.8 percent to $1,470.45 an ounce after touching an all-time high of $1,471.06. Tin for three-month delivery on the London Metal Exchange reached a record $32,950 a metric ton and was last up 1.1 percent at $32,900. Lead climbed as high as $2,861.75 a ton and aluminum touched $2,708 a ton. Cotton for May delivery was last up 1.6 percent at $2.116 a pound on ICE Futures U.S. in New York. Soybeans for May delivery rose 1.1 percent to $13.7825 a bushel on the Chicago Board of Trade and May-delivery corn advanced 1 percent to $7.6675 a bushel. To contact the reporter responsible for this story: Maria Kolesnikova in London at mkolesnikova@bloomberg.net To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net

Source