NEW YORK: Commodities mostly fell Tuesday as the dollar rebounded and traders lost interest in a deal to extend Bush-era tax cuts.
Trading varied dramatically throughout the day. In the morning, commodities shot up as investors moved into riskier assets. Oil surpassed $90 a barrel for the first time in more than two years. Gold rose to a new 2010 high at $1,432.50 an ounce, and silver climbed above a key milestone of $30 an ounce. But the gains didn't last.
"When the dollar started to rally, you saw selling" in commodities, said Jack Scoville, vice president of the Price Futures Group.
The dollar rose 0.3 percent against six other currencies. It had been down as much as 0.4 percent earlier before recouping its losses by midday. Commodities tend to fall when the dollar rises against other currencies. Since they're priced in dollars, commodities become more expensive for foreign investors when the dollar rises against other currencies like the euro and the Japanese yen.
Crude oil for January delivery settled down 69 cents, or 0.8 percent, to $88.69 a barrel in electronic trading on the New York Mercantile Exchange. Oil prices have risen by about $10 in the past two weeks, and many analysts believe it could rise to $100 a barrel in 2011.
Other energy contracts were also down. Natural gas fell 9.5 cents, or 2.1 percent, to $4.393 per 1,000 cubic feet. Heating oil fell less than a cent, or 0.2 percent, to $2.4702 a gallon.
Analysts predicted that some traders were taking profits from recent gains in the commodities market despite news of an agreement between President Barack Obama and Republican leaders to extend tax cuts.
"A lot of times you see bull runs end on good news, at least temporarily," said Spencer Patton, founder and chief investment officer for hedge fund Steel Vine Investments LLC.
Gold for February delivery fell $7.10, or 0.5 percent, to settle at $1,409 an ounce. In metals contracts for March delivery, silver fell 4.20 cents, or 0.1 percent, to settle at $29.777 an ounce, while palladium lost $12.70, or 1.7 percent, to $738.70 an ounce. January platinum gave up $8.40, or 0.5 percent, to $1,713.60 an ounce. Copper, however, rose 4.15 cents, or 1 percent, to $4.0495 a pound.
Orange juice futures fell as traders became less concerned about cold weather in Florida.
March contracts for frozen orange juice concentrate fell 3.50 cents, or 2.1 percent, to $1.6180 a pound. Orange juice concentrate surged 4.8 percent Monday as traders worried that temperatures could fall into the 20s and 30s for an extended period, damaging the crop. But that looked increasingly unlikely, with meteorologists predicting warmer temperatures later in the week.
In other agricultural commodities, wheat for March delivery fell 8.25 cents, or 0.7 percent, to settle at $7.8475 a bushel. March corn lost 6.25 cents, or 1.1 percent, to settle at $5.6175 a bushel and January soybeans dropped 3 cents, or 0.2 percent, to $12.8550 a bushel.
Cocoa for March delivery rose $19, or 0.6 percent, to settle at $3,084 per metric ton. Traders are concerned that exports from the Ivory Coast, the world's largest cocoa producer, could be effected by political tensions stemming from a disputed presidential election. - AP
