London - Gold, corn and tin hit record highs on Monday, silver touched its highest in 31 years, lead hit a three-year peak and oil touched its highest in two-and-a-half years as investors worried about inflation and future supplies.
Rising raw material prices have already prompted rate rises by the European Central Bank and People’s Bank of China, and expectations of a bumper corporate earnings season are likely to keep commodities rising.
“Investors want assets to protect themselves against rising inflation and possible shortages in the future so the surge in commodities looks set to continue, at least in the short term,” said Carsten Fritsch, commodity analyst at Commerzbank.
“The weaker dollar is supporting commodities as they are negatively correlated, and the Chinese growth story is intact, despite recent rate rises,” Fritsch said.
After rallying to a record high of $1 476.21 an ounce, spot gold eased back to around $1 467 in late morning trade, down around $5 on the day, while silver hit its highest since early 1980 at $41.93 and was later at $41.10/oz against $40.85.
“I think there is a good chance that gold could hit $1 500/oz within this quarter - and perhaps even higher if we see the weakness in the dollar persist and the Federal Reserve continues their relatively easy monetary policy,” said Ong Yi Ling, investment analyst at Phillip Futures in Singapore.
“This week, perhaps, the focus could be on whether the Federal Reserve actually indicates to the market whether they will be exiting their loose monetary policy, and whether they display any hawkish signals.”
Interest rate differentials and uncertainty over the US Federal budget have helped drive down the value of the dollar by more than 5% this year.
Peace plan Brent crude oil hit its highest since August 2008 at $127.02 per barrel before slipping back more than a dollar after the African Union said Muammar Gaddafi had accepted a plan to end civil war, including an immediate ceasefire.
May Brent was down $1.50 per barrel in morning trade to $125.15.
US crude for May touched $113.46, its highest in more than two-and-a-half years, but then also lost more than $1 to trade at around $111.70.
Elsewhere in oil-producing nations, tensions simmered.
Dozens of unemployed university graduates and teachers staged rare protests in two Saudi cities on Sunday to demand jobs and better wages in the biggest Arab economy, which is struggling to reduce joblessness.
US corn futures jumped 2% to a record on thinning stockpiles in top exporter the United States, as traders raised doubts about a government report that kept US end-of-season forecast inventories unchanged.
Chicago Board of Trade corn for May hit a high of $7.83-3/4 a bushel before slipping back to around $762-1/4.
China’s benchmark cotton futures traded on the Zhengzhou Commodity Exchange rose sharply after a US department of agriculture report on Friday showed extremely tight supplies.
The September cotton contract rose 5% to 30 300 yuan ($4 637) per tonne, while US cotton rose 2% to $2.07 per pound, around 10% off its contract high.
In base metals, three-month copper on the London Metal Exchange gained 0.7% to $9 940/t, extending last week’s rise of more than 5%, but then slipped back to around $9 842.75.
China’s plan to halt construction of new aluminium smelters may help support aluminium prices, even though it could take some time to rein in overcapacity in the industry, analysts said.
Spot iron ore prices hit $190/t and key indices clung to a more than one-month high, as top consumer China rebuilds inventories amid improved demand for steel.
China’s copper imports in March jumped 29.2% on the month to 304 299t, but the figure was still down a third from the level a year earlier.
China’s customs data also showed the country imported 59.48 million tonnes of iron ore in March, up 22.3% from February, as steel mills ramped up production.