Commodities rally broadly after report consumers spending more; gold rises, dollar falls

Commodities rally broadly; gold up, dollar weak

NEW YORK — Commodities rallied broadly Friday after the government reported that consumer spending helped lift the economy in the first three months of the year.

Gold prices also rose as the euro strengthened against the dollar. A weaker dollar makes commodities cheaper for foreign investors, since most commodities are priced in dollars. The ICE Futures US dollar index, which measures the dollar against six other currencies, fell 0.20 percent.

Investors shied away from riskier assets earlier in the week, largely over fears Greece might default on its debt. Analysts say investors are becoming more willing to take on risk following Friday’s upbeat report on gross domestic product in the U.S. and apparent progress toward resolving Greece’s debt crisis.

Oil rose above $86 on the GDP report and on growing concerns that a spill in the Gulf of Mexico will affect supply. Oil rose 98 cents to settle at $86.15 per barrel on the New York Mercantile Exchange.

The government said gross domestic product grew by 3.2 percent from January to March. It was the biggest improvement in consumer spending in three years.

Greek Prime Minister George Papandreou said new austerity measures are needed along with bailout loans for country’s survival. Greece has been under pressure to rein in its spending as a condition of receiving a package of bailout loans. A deal will allow Greece to pay debts coming due May 19.

Greece, the European Union and the International Monetary Fund are expected to complete talks this weekend over what extra steps Athens needs to take as part of the rescue deal. A default in Greece could threaten the euro, a currency shared by 16 European nations, and jeopardize the continent’s recovery.

Adam Klopfenstein, a senior market strategist with Lind-Waldock, said gold is still benefiting from the dollar’s weakness.

“People want to be in something tangible,” Klopfenstein said, noting that, “The Greek package looks like it might be a little bit stronger.”

Gold and silver rose. Gold for June delivery rose $11.90 to settle at $1,180.70 an ounce on the New York Mercantile Exchange.

Silver for July delivery rose 6 cents to settle at $18.639 an ounce.

Platinum for July delivery jumped $11.40 to settle at $1,745.10 an ounce. Palladium for June delivery added $6.75 to settle at $555.75 an ounce. All three metals trade on Nymex.

Copper for July delivery 0.3 cent to settle at $3.3535 a pound.

In other Nymex trading in May contracts, heating oil rose 3.73 cents to settle at $2.2885 a gallon, and gasoline gained 4.07 cents to settle at $2.3963 a gallon. Natural gas lost 6 cents to settle at $3.920 per 1,000 cubic feet.

In agricultural commodities, wheat for July delivery rose 7.5 cents to settle at $5.03 a bushel. Corn rose 6.25 cents to settle at $3.7525 a bushel.

Soybeans for July delivery rose 3 cents to settle at $9.99 a bushel.