| Commodities prices surged yesterday |
|
| Friday,March 20,2009 Posted: 10:53 BJT(0253 GMT) |
| From:Financial Times Article type:Redistributed |
Commodities prices surged yesterday as investors sought protection against the risk of higher inflation by buying everything from oil and gold to copper and sugar.
Plans by the Federal Reserve to buy $300bn of US government debt triggered the stampede into commodities markets, which had suffered sharp price falls on worries that the world was heading for a depression. For the first time in almost a year, traders looked to oil and other raw materials as a hedge against an unexpected jump in prices.
The benchmark S&P GSCI index, a basket of raw materials, rose 6 per cent as oil prices soared to $51 a barrel, up 7 per cent on the day, to their highest level since December. Copper reached a four-month high.
The switch into commodities was triggered by concern that the US central bank might find it difficult to manage down the country's money supply when its economy turned. That could lead to sharply rising prices for many goods and services.
Hussein Allidina, head of commodities research at Morgan Stanley in New York, said: “Investors are buying commodities as protection against inflation and as a hedge against a weaker US dollar.”
The price rises gained extra momentum from a weakening dollar. The US currency extended its fall against the euro to 4.5 per cent over the past two days, hitting a low of $1.37 per euro.
Gold rose to $960 a troy ounce, up 8 per cent since the Fed's announcement on Wednesday.
|
Exchanges & Cooperation
