Oil jumped 2% on Monday and sharp gains in cotton, corn and soybeans also helped boost a commodities index to eight-month highs, while gold extended record highs as investors waited to see if the Federal Reserve would signal any plans to stimulate the U.S. economy.
The Reuters-Jefferies CRB, an index that tracks commodity prices across 19 mostly U.S.-traded futures markets, was up almost half a percent by 12:00 p.m. EDT after soaring to its highest level since Jan. 20.
The U.S. dollar slipped on worries that the Federal Reserve may suggest the need to inject more stimulus into the struggling economy when it announces its latest policy decision on Tuesday.
A weak dollar invariably boosts prices of commodities denominated in the greenback, making them more attractive to users of currencies such as the euro and yen.
Most economists do not expect the Fed to announce any new measures to stimulate the economy on Tuesday when the policy meeting concludes. But some believe the central bank may opt to make major repurchases of U.S. government debt later this year if the economic recovery falters.
Shares on Wall Street, a proxy for business confidence, also rose over speculation about the Fed despite signs that the U.S. housing market — a cornerstone of the U.S. economy — was still in trouble.
The buoyant stock market particularly helped firm prices of raw materials such as oil and copper, which often watch equities for direction.
The National Bureau of Economic Research, meanwhile, declared that the U.S. recession—the longest downturn since the Great Depression of the 1930s — had been over since June 2009.
Other U.S. macroeconomic data awaited by investors this week include housing starts for August due on Tuesday, July home prices indicator on Wednesday; existing-home sales data and unemployment claims on Thursday; and durable goods and new-home sales figures for August on Friday.
U.S. gold futures' benchmark December contract rose as much as $9.70, or short of 1%, to an all-time high of $1,285.20 per ounce. It was the fourth record high in five trading days for the precious metal.
Spot gold, which reflects the price of bullion, peaked at $1,283.70 an ounce, against the $1,275.95 bid seen in New York late on Friday.
U.S. soybean and corn prices rose about 2% each, near two-year highs, as the broadly bullish sentiment on the commodities complex added to concerns about low yields for the two crops in impending harvests.
U.S. crude oil's front-month contract rose 2% to a session high of $75.45 a barrel.