Millie Munshi and Dave McCombs
Friday, Aug 22, 2008
Commodities headed for their biggest weekly gain in 33 years as oil traded near its highest for more than two weeks and a weakening dollar revived demand for raw materials as alternative assets.
The Reuters/Jefferies CRB Index of 19 commodities soared 3.7 percent to 405.92 in New York yesterday. A settlement at that level today would mark a 6.2 percent gain for the week, the most since July 1975. The dollar headed for its first weekly decline against the euro since July 11, while oil climbed past $121 a barrel after jumping more than $5 yesterday.
A rebound in the CRB and a resumption of the dollar’s decline may stall a rout in commodities that has sent the index down 14 percent from a record on July 3. Raw materials priced mostly in dollars often move in the opposite direction to the U.S. currency.
article continues below
“Speculators’ stomachs are nearly empty, so they have the appetite to buy more,” Bob Takai, general manager of financial services at Sumitomo Corp., said by phone in Tokyo. “Buyers for oil will emerge from here and the price is going to go up.”
Gold for immediate delivery was little changed at $835.99 an ounce, after advancing 2.9 percent yesterday. Every commodity on the CRB except hog futures moved higher yesterday. Nickel was up 8.2 percent, cocoa rose 6.8 percent and silver 5.2 percent.
Commodities are gaining on speculation demand will increase from China as the country resumes work at factories and infrastructure projects that were shut or slowed during the Olympics.