Commodities rose, capping the biggest two-day gain in three months, after an unexpected drop in U.S. jobless claims spurred optimism for the U.S. economy, bolstering prospects for crop and industrial-metal demand. The Standard & Poor’s GSCI Index of 24 raw materials rose 2.1 percent to settle at 643.41 at 3:45 p.m. in New York. Metals including lead and zinc led the rally. Corn, wheat and soybeans jumped after the U.S. government forecast smaller crops. Gold tumbled the most in seven weeks. “Things may not be as bad as some people were predicting,” Tom Mangan, who helps oversee $2.8 billion at James Investment Research Inc. in Xenia, Ohio, said in a telephone interview. “The chances of a recession might seem somewhat less today as reflected by stock prices, and, of course, if the economy is going to grow, then demand for commodities will grow.” On Aug. 8, investors dumped equities and most raw materials for the relative safety of Treasuries, the Swiss franc and gold amid mounting concern over a faltering global economy and mounting debt woes in the U.S. and Europe. Today, the Standard & Poor’s 500 Index jumped as much as 5.8 percent, and the franc plunged. “It’s now back a little bit to risk-on trade,” said David Thurtell, the head of metal research at Citigroup Inc. in Singapore. The Chinese yuan’s jump “is definitely good for commodities as that allows China to import more, and it’s a sign that the government is confident enough about the strength of domestic demand and cares less about exports,” he said. The Chinese currency strengthened beyond 6.4 per dollar for the first time in 17 years after the Federal Reserve pledged to keep U.S. interest rates at a record low. Lead, Corn In London, lead jumped as much as 5.1 percent. Copper futures in New York climbed 3 percent, the most since March 17. In Chicago, corn jumped as much as 4.4 percent. Gold fell 1.8 percent after CME Group Inc. boosted margins on Comex contracts, prompting investor sales following a rally to a record topping $1,817.60 an ounce. The GSCI index jumped 2.5 percent yesterday, led by precious metals. In two days, the gauge climbed 4.7 percent, the most since May 10. The measure has climbed 23 percent in the past year, while the S&P 500 gained 7.6 percent. To contact the reporters on this story: Yi Tian in New York at ytian8@bloomberg.net; Sharon Lindores in London at slindores@bloomberg.net To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net

Source