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COMMODITIES-Broad rally on weaker dollar, gold up on U.S. shutdown

By Barani Krishnan

NEW YORK, Oct 2 (Reuters) - Commodities rallied sharply on

Wednesday, with the partial U.S. government shutdown belatedly

boosting gold after the previous day's selloff and a weaker

dollar lifting oil, copper and most other markets.

Some commodities rose on the strength of a better demand


Raw sugar hit 6-1/2 month peaks as traders and investors

focused for a second day on the biggest sugar purchase in more

than two decades by a single merchant, Louis Dreyfus.

Wheat closed at 11-week highs on bets that slow shipments of

the grain out of the Black Sea region could help maintain the

brisk pace of U.S. exports.

The Thomson Reuters-Jefferies CRB index, a

closely-watched indicator for commodity prices, gained nearly 1

percent as 16 of the 19 markets on the index settled in positive


The broad commodities rally came after the dollar

fell to an eight-month low against the euro following the

European Central Bank's decision to hold to current interest

rates. Some market participants had expected the ECB to veer

toward a rate cut.

Gold was also helped by the weaker dollar although its

run-up was largely viewed as a delayed reaction to the U.S.

government shutdown, which began on Tuesday.

By 4:00 p.m. EDT (2000 GMT), the spot price of bullion

was up nearly $30 to $1,315.80 an ounce. The rally of

more than 2 percent recouped the bulk of gold's losses in the

previous session.

Bullion fell about $40 on Tuesday, near a two-month bottom

of below $1,283, as some investors dumped their gold holdings on

frustration with the market's inability to rally immediately

after the U.S. government shutdown. Gold is basically seen as a

hedge against economic and political troubles.

In Wednesday's session, U.S. stocks ended lower for a second

straight day. Data from private processor ADP showed U.S.

private employers adding fewer jobs than expected in September,

providing further support to gold as a safe-haven.

"If the economic numbers continue to be weaker than

expected, we may see a slide in the dollar, and money in

equities flow back into Treasuries and metals for the time

being," said a Tom Power, senior commodities trader at futures

brokerage R.J. O'Brien.

In oil, U.S. crude settled up 2 percent at $104.10 a

barrel. Benchmark Brent crude out of London gained 1.2

percent to finish at $109.19.

Copper rose off a one-week low. Benchmark three-month copper

on the London Metal Exchange CMCU3 closed up 1.13 percent at

$7,279 a tonne, up from $7,199 on Tuesday.

Prices at 4:30 p.m. EDT (2030 GMT)



US crude 103.83 1.79 1.8% 13.1%

Brent crude 109.07 1.13 1.1% -1.8%

Natural gas 3.542 -0.067 -1.9% 5.7%

US gold 1320.70 34.60 2.7% -21.2%

Gold 1316.26 30.27 2.4% -21.4%

US Copper 3.31 0.04 1.2% -9.3%

LME Copper 7279.00 80.00 1.1% -8.2%

Dollar 79.898 -0.243 -0.3% 4.1%

CRB 286.444 2.424 0.9% -2.9%

US corn 439.00 0.00 0.0% -37.1%

US soybeans 1273.75 5.75 0.5% -10.2%

US wheat 686.00 4.75 0.7% -11.8%

US Coffee 114.45 0.35 0.3% -20.4%

US Cocoa 2632.00 -2.00 -0.1% 17.7%

US Sugar 17.48 0.00 0.0% -10.4%

US silver 21.846 21.635 1.7% -27.7%

US platinum 1389.80 8.10 0.0% -9.7%

US palladium 720.20 2.30 0.3% 2.4%