Industrial, Precious Metals Prices Rally

NEW YORK — Industrial and precious metals prices climbed Wednesday, bolstered by a weak U.S. dollar and the resulting uptick in foreign demand for commodities.

Gold and silver prices rose at midday, while copper, nickel and zinc also advanced. Agriculture futures jumped, and energy prices slipped.

The U.S. dollar extended its decline Wednesday although a growing number of investors speculated that the Federal Reserve wouldn't lower interest rates again this year. Commodities benefited from the dollar's slide as investors searched for more lucrative investments than the greenback; the dollar's weakness also stoked demand from foreign buyers who see prices quoted in dollars as relatively cheap.

December gold gained $1 to $744.10 an ounce on the New York Mercantile Exchange, and December silver picked up 9.7 cents to $13.68 an ounce.

As investors pored over the minutes of the Fed's Sept. 18 meeting for a second day, the market consensus appeared to be moving away from a prediction of a rate cut, either at the Fed's Oct. 30-31 meeting or its meeting in December. Interest rates underpin a currency; higher rates would boost the greenback, while lower rates would put more pressure on an already declining dollar.

The Fed cut its benchmark federal funds rate by a hefty half-point last month to alleviate the impact of a tight credit conditions and a suffering housing market. Although the housing slump continues, credit markets have loosened since then.

Investors have flocked to commodities in search of a haven from the dollar, said Wachovia Corp. senior economist Mark Vitner.

"Commodities are likely to be a better store of value than holding a particular currency," he said. "While a currency may depreciate, commodities may remain relatively stable relative to all currencies."

Copper prices rose on both the Nymex and London Metal Exchange, where other industrial metals traded higher. Nymex December copper gained 8.7 cents to $3.7045 a pound, while nickel, zinc, lead and tin prices jumped on the LME.

With economic news light, traders in the agriculture and energy markets looked ahead to upcoming government reports on product supply and demand.

In agriculture, soybean futures led broad gains on the Chicago Board of Trade. Soybean futures headed for a second day of sharp gains amid expectations the U.S. Department of Agriculture could scale back its harvest estimates in its crop report due Friday. The monthly report on world inventories and demand will be the first to include estimates based on this year's U.S. corn and soybean harvests, which are almost half complete.

The USDA has a history of changing acreage numbers in the October report, "so there could be an acreage surprise on Friday," wrote John Roach of Roach Ag. Marketing Ltd., in a report.

December wheat rose 2 cents to $8.475 a bushel, while November soybeans added 9.5 cents to $9.5975 a bushel. December corn rose 3.25 cents to $3.4575 a bushel.

Energy prices sagged as oil teetered around $80 a barrel amid projections for a large build in crude oil stockpiles. The Energy Information Administration reports weekly petroleum inventories on Thursday, one day late due to Monday's Columbus Day holiday. Analysts expect U.S. supplies of crude to rise by 1 million barrels, according to a Dow Jones Newswires survey. Gasoline supplies are forecast to fall by 300,000 barrels, while stockpiles of distillates such as diesel fuel and heating oil are forecast to fall by 600,000 barrels.

Crude oil for November delivery fell 25 cents to $80.01 a barrel on the Nymex, while gasoline futures fell 2.14 cents to $1.9988 a gallon.

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