Gold prices extended their record run, trading yesterday above $1,060 a troy ounce, while oil and other commodities also surged on the back of US dollar weakness.
Alcoa, the US-based aluminium producer, started the third-quarter earnings season with an unexpected profit, boosting metals prices as investors took the results as a sign of higher demand for commodities.
The dollar weakened to $1.4817 against the euro and plunged to its lowest level in 14 months against a basket of major currencies.
A weaker dollar supports oil and other commodities because it makes raw materials priced in the US currency cheaper for those holding alternative currencies. In addition, it boosts the price of gold as investors use the metal as a hedge against the dollar.
Spot gold prices surged to a fresh all-time high of $1,061.2 an ounce, up 1.7 per cent from Wednesday's last quote in New York. Gold prices have rallied almost 6 per cent this week.
Silver prices rose to a 15-month high above $17.92 an ounce, up 2.1 per cent.
Suki Cooper, analyst at Barclays Capital in London, said that similarly to gold, silver prices have gained momentum on the back of strong investment demand, but she warned that the higher prices did not necessarily reflect robust fundamentals. "Silver's supply and demand dynamics continue to paint a weak picture," she said.
Platinum rose 0.9 per cent to $1,338 per ounce while palladium surged 2.2 per cent to $319 per ounce.
In the energy market, oil prices surged above $70 a barrel. Ed Meir, at brokerage MF Global in New York, said that the short-term outlook for oil prices had not changed, despite the dollar move.
"We still seem to be confined to a $65-$75 trading range basis for West Texas Intermediate, with all the usual variables seeing to it that this band stays intact for at least a little while longer," he said.
Nymex November West Texas Intermediate oil rose $2.12 to $71.69 a barrel while ICE November Brent crude moved $2.57 higher to $69.77 per barrel.
Nymex November natural gas prices consolidated near the $5 per million British thermal unit level, while gasoline and heating oil also posted gains.
Base metals rose sharply, supported by Alcoa's return to profitability. In late trading on the London Metal Exchange, aluminium rose 4.2 per cent to $1,912 a tonne. Copper surged 4.1 per cent to $6.340 a tonne. Zinc jumped 7.2 per cent to $2,079.25 a tonne, supported by production problems. Lead surged 5.8 per cent and nickel moved 4.2 per cent higher.
Agricultural commodities also rallied on dollar weakness, poor weather and signs of strong exports for US wheat, traders said.
CBOT December corn rose 2.6 per cent to $3.69 a bushel while CBOT December wheat rallied 3.8 per cent to $4.81 a bushel.
Richard Feltes, of MF Global in Chicago, said it was "hard to imagine worse weather for mid-October" with extreme "cold and heavy rain" in the US.
Traders are concerned that US corn and soyabean crops, which were planted later because of poor weather in the spring, risk being hit now by a freeze.
Sugar lost ground, with the ICE March raw sugar contract down 1.4 per cent to 22.77 cents per pound.
