[NYTr] Oil hits $100; Gold Surpases 1980 All-Time High

[All the News That Doesn't Fit]

Reuters via Forbes - Jan 2, 2008
http://www.forbes.com/markets/feeds/reuters/2008/01/02/2008-01-02T215601Z_01_N02599328_RTRIDST_0_MARKETS-COMMODITIES.html


Oil hits $100 as 2008 starts with investment binge

By Alden Bentley

NEW YORK (Reuters) - Crude oil surged to $100 a barrel for the first
time on Wednesday, and gold bullion broke above its 1980 high as the
first taste of investor sentiment suggested commodities were the flavor
of the new year.

The Reuters/Jefferies CRB index of 19 commodity futures rose 2.3
percent to a record 366.86 on the first trading day of 2008. That
exceeded the previous high from May 2006, building on strong gains in
the fourth quarter of 2007, which gave investors in commodities by far
the largest annual returns of any asset class.

If anything, the effect was amplified with the calendar change, as the
dollar fell against the euro and the Dow Jones industrial stock average
tumbled 236 points.

Brian Hicks, co-manager of the Global Resource  Fund at US Global
Investors, said Wednesday's outsized commodity rallies in London, New
York and Chicago looked suspect, as not all players had returned from
year-end holidays.

"We'll probably see some slowing growth in the States, and maybe a bit
slower growth abroad, but with commodities across the board the
supply-and-demand fundamentals are still extremely tight and we think
that's going to keep prices higher," he continued.

Spurred on by violence in OPEC members Nigeria and Nigeria, February
crude futures at the New York Mercantile Exchange touched the $100 mark
at midday, eclipsing the previous record of $99.29 a barrel hit Nov.
21, before retreating to end at $99.62, up $3.64.

Suspected militants attacked two police stations, a luxury hotel and a
night club in Nigeria's oil city, Port Harcourt, on Tuesday, leaving 18
people dead.

Al Qaeda's North Africa wing claimed responsibility for the deadly
suicide bombing in Algeria on Wednesday in a recording aired by Al
Arabiya television.

The dollar slid on Wednesday after one of the gauges of the U.S.
manufacturing sector tumbled last month to its lowest level since April
2003.

"I think oil going to $100 is more a function of political instability.
In this case, it's Nigeria. For the stock market, there might also be a
psychological effect of oil hitting triple digits," said Ernie Ankrim,
chief investment strategist for Russell Investment Group in Tacoma,
Washington.

Spot gold hit a record $861.10 an ounce, boosted as the surge in crude
oil sparked fears of inflation and a possible recession in the United
States.

It surpassed its previous peak of $850, set in January 1980, and was
quoted in New York at $855.70/$856.50, against Monday's late quote of
$832.60/$833.40 in New York.

Gold futures for February delivery settled up $22, or 2.6 percent, at
$860 an ounce on the COMEX metals division of the New York Mercantile
Exchange, reaching a contract high at $864.90. The record high for
benchmark futures was $875 an ounce.

"There certainly are things that should make investors think twice.
Most importantly, the developing slowdown in the U.S. and the worldwide
economies. That could very well be a negative for gold in 2008, and
that could dampen some of the buying interest," said Patrick Fearon,
precious metals analyst with A.G. Edwards & Sons in St. Louis.

Chicago Board of Trade soybeans reached a 34-year high and wheat rose
its daily 30-cent limit.

March corn rose 7 cents to $4.62-1/2 per bushel. Buying escalated when
the contract broke above technical resistance at $4.60. It set a new
11-year high of $4.69-1/2 per bushel for a spot month, but was still
below the record $5.54-1/2 that was set in July 1996.

The demand for corn from the livestock, biofuels and export sectors
remains brisk and U.S. export sources said late on Monday they expected
strong export demand for both U.S. corn and wheat in 2008.

Also, U.S. corn will benefit from China's decision to tax grain exports
in 2008.

"In the fourth quarter of last year there were a lot of mandates from
pension funds and so on for increased commodity investment," said a
commodity trader at a macro hedge fund in Connecticut. "Clearly, some
mandates only became active today, or Jan 1. So this is the first
possible opportunity for those guys to put their money to work. They're
more enthusiastic than I expected them to be." 

(Reporting by Alden Bentley; Editing by Walter Bagley) 

Copyright 2008 Reuters