Commodity Inflation Consumer Prices
US GOLD – Comex gold bounces along with agricultural commodities as inflation talk gains steam
By: Tom Jennemann
New York 31/03/2011 – Gold on the Comex division of the New York Mercantile Exchange posted solid gains Thursday as commodities benefited from increased concerns about inflation.
Gold futures for June delivery were recently up $12.90, or one percent, at $1,437.80 an ounce and earlier touched $1,440.00 – just shy of the all-time mark of $1,448.60.
“A weaker dollar is helping to extend some support and it’s been strong day for a lot of commodities. The agricultural commodities, in particular, are significantly higher and that’s feeding the inflation argument and helping to lift gold,” Sterling Smith, an analyst with Country Hedging said.
“We may have a chance to take out the record high, quite possibly by next week,” he added.
Corn futures for May delivery on the Chicago Board of Trade increased by 30 cents, or 4.5 percent, to $6.9325 bushel, while wheat futures for May delivery were up 24.25 cents, or 3.3 percent, to $7.515 a bushel.
Light sweet crude (WTI) oil futures for May delivery on the Nymex were recently up $2.11 at $106.38 per barrel.
Comments from retailer Walmart and chocolate producer Hershey Co. are also helping to fuel speculation about near-term inflation.
Bill Simon, Walmart CEO, told USA Today that American consumers could face “serious inflation” in the coming months for clothing, food and other products, while Hershey announced that it’s increasing its wholesale prices by 9.7 percent because of rising costs for raw materials, packaging, fuel, utilities and transportation.
“Commodity inflation is real and it’s now impacting consumer prices, no matter what the Fed says. We’re looking at a situation where inflationary pressures are building while US central bank is dragging it’s feet in terms of its policy,” a US-based gold trader said.
Gold also benefited Thursday from a weaker dollar, which was recently down three quarters of a cents against the euro at 1.4193.
Comex silver for May delivery was recently up 18.4 cents at $37.695 an ounce in New York. On Wednesday, the grey metal settled at a 31-year high of $37.44. Additionally, the gold-silver ratio has fallen to its lowest level since 1983.
“Silver prices have been driven higher by growing investment demand and retail interest in particular, in turn detaching itself from its fundamentals. We continue to expect the silver market to remain in surplus to the tune of 3,000 tonnes in 2011 supported by another year of record mine supply,” Barclays Capital said in a note.