COMMODITIES-Gold edges up, harvest tumbles grains

Published: 05 Nov 2009 17:29:03 PST

* US gold builds on gains amid economic hopes

* Oil hovers around $80

* Harvest push tumbles corn, soybeans

CHICAGO, Nov 5 - Growing confidence in the U.S. economy's recovery from a cripplying recession lifted gold prices on Thursday, while the best week of grain harvest in the United States so far this fall tumbled soybeans and corn.

Oil was lower in a mild setback but was hovering around $80 per barrel after a steep decline in U.S. crude inventories sent prices up sharply on Wednesday.

Industrial metal copper fell despite positive economic news in technical selling after rallying past $3 per lb and amid rising inventories that underscored weak demand.

The U.S. dollar index, a measure of the greenback's value against a basket of six currencies, was slightly higher after the European Central Bank kept interest rates steady.

The Reuters-Jefferies CRB index, a global benchmark comprising 19 commodities, fell 0.7 percent.

U.S. gold futures added to gains from Wednesday to get within striking distance of $1,100 an ounce amid optimism over the economy, and decoupling itself from the dollar.

Bullion and the dollar typically have an inverse relationship, with investors chosing between the two assets based on their appetitite for risk, among other factors.

Gold hit recod highs both on Tuesday and Wednesday after India bought 200 tonnes of bullion from the International Monetary Fund for $6.7 billion to boost holdings of its central bank.

Gains in gold on Thursday were capped by the metal's inability to breach the psychologically important $1,100 mark.

"The fact that we didn't manage to go through $1,100 might lead some investors to reconsider their positioning in the sector," said Commerzbank analyst Eugen Weinberg.

U.S. gold for December delivery rose $2.20 to $1,089.50 an ounce at 11:45 a.m. CST (1745 GMT). It hit a record high of $1,098.50 on Wednesday.

Spot gold was bid at $1,088 an ounce, down from $1,092.35 late on Wednesday in New York. This was due in part to the inability to punch past the $1,100 level.

HARVEST TUMBLES GRAINS

Corn and soybean futures at the Chicago Board of Trade fell as the harvest in the U.S. Midwest advanced decisively this week after long delays due to incessant rains.

The harvest pace, until this week, had been the slowest since government record began in 1985.

The corn harvest was 25 percent complete as of Sunday, compared with the five-year average pace of 71 percent. Farmers had cut 51 percent of the soy crop, which was still well behind the average pace of 87 percent for this time of year.

The U.S. Agriculture Department will issue its monthly crop supply and demand estimates on Nov. 10. In October, it forecast a record soy crop and second-biggest corn output.

Soybeans for November delivery fell 21-1/2 cents, or 2 percent, to $9.74 a bushel. December corn was down 4-1/2 cents, or 1 percent, at $3.79-1/2 cents.

Oil futures were lower as some investors had concerns over the U.S. jobless rate and the impact on demand.

"There were still 500,000 new (jobless) claims and the economy is still muddled," said Gene McGillian, analyst at Tradition Energy in Stamford, Connecticut.

U.S. crude for December delivery fell 40 cents to $80 per barrel.

Prices at 11:35 a.m. CST (1735 GMT)

Last Change Pct 2008 YTD

Chg Close % Chg US crude <CLc1> 80.02 -0.38 -0.5 44.60 79.4 Brent crude <LCOc1> 78.47 -0.42 -0.5 45.59 72.1 US gold <GCZ9> 1093.00 5.70 0.5 884.30 23.6 Gold <XAU=> 1088.90 -3.45 -0.3 878.20 24.0 US Copper <HGZ9> 296.20 -3.10 -1.0 139.50 112.3 LME Copper <MCU3> 6537.00 -33.00 -0.5 3060.00 113.6 Dollar <.DXY> 75.75 0.11 0.2 81.15 -6.7 CRB <.CRB> 275.190 -1.750 -0.6 229.540 19.9 US corn <Cc1> 3.8025 -0.0375 -1.0 4.07 -6.6 US soybeans <Sc1> 9.7500 -0.2050 -2.1 9.7225 0.3 US wheat <Wc1> 5.1550 -0.0550 -1.1 6.1075 -15.6 US Coffee <KCZ9> 142.20 1.45 1.0 112.05 26.9 US Cocoa <CCZ9> 3195 -77.00 -2.4 2665 19.9 US Sugar <SBH0> 22.97 -0.62 -2.6 11.81 94.5 US silver <SIZ9> 17.415 0.010 0.1 11.295 54.2 US platinum <PLF0> 1361.00 -8.30 -0.6 941.50 44.6 US palladium <PAZ9> 330.50 1.70 0.5 188.70 75.1