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Gold May Climb to $1000; Drought in India is Ending; Deficit Supports 28-year Highest Sugar Price

September 7, 2009 at 20:53 by Vladimir Vyun

Gold may climb to $1,000 per ounce as a declining dollar increases the metal’s attractiveness as a hedge against inflation. The dollar dropped 0.4 percent against the euro as confidence of investors in Europe increased for a second month in September. Gold tends to gain when the dollar falls. Immediate-delivery bullion gained $0.79 (0.1 percent) to $995.19 per ounce by 16:52 in London.

Drought in India is ending with reviving of monsoon rains, aiding crops. India is the world’s second-biggest producer of rice, wheat and sugar. The monsoon will help to replenish water in reservoirs, which will be used by farmers to grow wheat and oilseeds planted between October and December. The impact on winter crops expected to be limited with increase of the water reservoir levels. October futures for soybean delivery fell 2.9 percent to 1,948 rupees per 100 kilograms. September delivery for corn dropped 0.7 percent to 954 per 100 kilograms. Sugar prices at Vashi, the nation’s biggest wholesale market for the commodity, slipped 2 percent to 3,188.35 rupees per 100 kilograms.

Sugar prices, which reached their 28-years highest level last week, are likely to be supported by a global supply deficit. Prices may rise, but not much. Futures for raw sugar last week jumped to $0.2485 per pound, the highest price since February 1981.

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