Commodities advance to highest this year as oil to gold rally

[NEW YORK] Commodities climbed to the highest this year as oil extended gains on speculation the glut in the US will ease.

The Bloomberg Commodity Index of 22 raw materials rose as much as 0.4 percent to 105.1778, the highest since Dec. 31, and was at 105.1007 by 1:10 pm in Singapore. West Texas Intermediate crude extended its advance above US$60 a barrel after closing on Wednesday at the highest level since December. Gold rose as higher energy prices boosted speculation US inflation will start to pick up.

Raw-material prices have rebounded about 9 percent since reaching a 12-year low in March as crude rallied, the dollar fell and speculation increased that China may add to stimulus. The gains in energy were spurred as US drillers idled rigs. The BCOM gauge has still plunged more than 50 per cent from its record in 2008, after a decade-long bull market encouraged farmers, miners and oil producers to ramp up supplies.

"We're seeing commodities now respond to lower prices and that's generally across the board, not just oil," Jonathan Barratt, the chief investment officer at Ayers Alliance Securities in Sydney, said by phone. "Investors are starting to rethink the supply story and the US dollar will probably weaken dramatically over the course of the next two quarters."