Gold above $US1, 400 an ounce, oil at a 25 month high and above $US89 as barrel and commodities generally at a 14 month high, risk was back on in a big way on Friday, despite some bad news from the American jobs market.
The Reuters/Jefferies CRB index a measure of commodities performance, rose 5%, the best gain since October of 2009.
The CRB index has climbed 20% since August 31, after Fed chairman Ben Bernanke all but confirmed that another bout of quantitative easing was on the cards.
In that time, cotton and gold rose to records, silver jumped to a 30- year high, copper advanced to a 30-month peak and oil hit two new 25 month highs.
Friday’s gains came despite the news that the American economy created only 39,000 jobs last month, which sounds low and was bad, despite some favourable figures for jobs in the previous four months.
But that didn’t worry investors as equities bounced back from a big early fall and commodity prices were strong all day, especially when it became known that US Federal Reserve chairman Ben Bernanke had given an interview to 60 Minutes on the CBS network in the US and didn’t rule out more measures to help the economy.
That news appeared in the market late in the day’s trading in the US and sent markets higher, the greenback lower and left investors with a smile on the dials for the week, instead of frowns.
The US dollar fell, reversing the momentum of the last 10 days off the back of the latest eurozone worries centred on Ireland, Portugal and Spain.
Perhaps the best measure of the ‘risk on’ attitude in markets on Friday was the Aussie dollar, which closed at 99.31 USc on Saturday morning, up from 97.58USc in Sydney on Friday evening and 96.39USc on Thursday, a sharp, 2.8% jump in two days and all down to the optimism on Friday night, our time, and not fundamentals.
The euro rose against the greenback dollar after the US government said nonfarm payrolls increased much less than expected and the unemployment rate rose to a seven-month peak.
Helping were some fundamentals, the very cold weather in Europe and the American north east which boosted oil, concerns about the wheat crop thanks to the heavy rain in Australia and doubts about the size of the Indian cotton crop.
Besides the surge in oil, gold and silver prices rose sharply as well.
Cotton had the biggest weekly jump in 39 years after India restricted exports and wheat jumped by the limit in Chicago after the flooding and heavy rain in NSW and Queensland this week cut estimates for the 2010 wheat harvest.
For the third straight day, cotton prices in New York closed limit up, which is a 6c (4.7% at this level) rise to $US1.3234 a pound, the biggest rise since the middle of last year.
A week or so ago cotton was trading around $US1.11 a pound.
Copper prices rose, capping the biggest weekly gain in more than four months.
Comex New York copper futures rose 2c, or 0.5%, to $US.3.99 a pound after weakening early on the poor jobs report.
That was a rise of 6.3% for the best, and the biggest weekly rise for more than five months.
Copper is up nearly 40% since late August.
On the London Metal Exchange, copper for delivery in three months added $US5 to $US8,725 a metric tonne ($US3.96 a pound).
LME tin finished steady but aluminium, lead, nickel and zinc fell.
And, Chicago wheat for March delivery jumped 30.5 USc, or 4.1%, to $US7.79 a bushel, taking the week’s gains to 13%, the best since Russia banned exports in August because of a bad drought.
Comex gold futures for February delivery jumped $US16.90, or 1.2%, to end at $US1,406.20 in New York.
The 3.1% rise last week was the best since late May and the price is now $US18 an ounce from the all time high of $US1,424.10 reached early last month.
Nymex January crude oil futures rose $US1.19 to settle at $US89.19 a barrel, the highest close since October 7, 2008 (when prices were plunging after the $US147 a barrel peak in July of that year).
For the week, US crude prices rose 6.48% and the best percentage gain since the 6.66% in the first week of last month, which was quickly undone the next week.
In London Brent crude futures traded up $US1.12 to $US91.80, after setting a fresh two-year high of $US91.85.
Comex silver futures for March delivery climbed 69.9UScs, or 2.4%, to $US29.271 an ounce. Earlier, the metal reached $US29.37, the highest since March 1980.
Silver jumped 9.3% last week, the best weekly gain since January.
Gold also gained on speculation China, the world’s second-biggest buyer, will step up purchases and the Shanghai gold exchange revealed that China’s imports jumped almost fivefold in the 10 months to the end of October.
