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U.S. Commodities: Gold, Silver Rise as Inflation Concerns Mount

Gold futures climbed to a two-week high on demand for a hedge against rising consumer prices, after China increased borrowing costs to slow inflation. Silver advanced to a one-month high, topping $30 an ounce.

China joined India, Indonesia, Thailand and South Korea in boosting interest rates this year as Asian policy makers seek to cool the economies leading a global rebound. A report in China is forecast to show inflation in the country expanded at the fastest pace in 30 months. World food prices rose to a record in January and probably will remain elevated, the United Nations said last week.

“People are buying gold as an inflation hedge,” said Matthew Zeman, a trader at LaSalle Futures Group in Chicago. “A more hawkish tone on the part of central banks is going to have people concerned about inflation.”

In other markets, wheat futures rose to a 29-month high on signs that countries are boosting grain inventories after food inflation spurred unrest in North Africa. Natural gas declined. The UBS Bloomberg Constant Maturity Commodity Index was little changed at 1,714.6.

Gold futures for April delivery rose $15.90, or 1.2 percent, to at $1,364.10 an ounce on the Comex in New York. Earlier, the price reached $1,368.70, the highest since Jan. 20.

JPMorgan Chase & Co., the second-biggest U.S. bank by assets, said it would accept the metal as collateral for trading.

The bank “is saying gold is safe enough to use as a store of value,” said Adam Klopfenstein, a senior strategist at Lind- Waldock, a broker in Chicago. “This is going to support a new wave of investors.”

Silver futures for March delivery gained 92.8 cents, or 3.2 percent, to $30.271 an ounce. Earlier, the price reached $30.285, the highest since Jan. 4.

Wheat

Wheat futures for March delivery rose 15.5 cents, or 1.8 percent, to $8.745 a bushel on the Chicago Board of Trade. Earlier, the price reached $8.8075, the highest for a most- active contract since Aug. 25, 2008.

Egypt, the world’s biggest importer, bought 55,000 metric tons from the U.S. in a tender on Feb. 5. Iraq, Turkey, Bangladesh and Algeria have issued tenders since Feb. 6, and Iran and Saudi Arabia may be in the market soon, the CME Group Inc. said in a report on its website.

“We had all these tenders that showed up over the weekend,” said Jeff McReynolds, the owner of McReynolds Marketing and Investments in Hays, Kansas. “It still shows a lot of demand showing up in the world market, and it hit all at once.”

Natural Gas

Natural gas declined to the lowest in almost 12 weeks on predictions for moderating U.S. temperatures that may limit demand for the heating fuel.

National Weather Service forecasts showed that warmer-than- normal weather is likely in the Midwest, mid-Atlantic and South from Feb. 13 through Feb. 17. Today, the Energy Department raised its forecast for 2011 gas production by 1.5 percent.

“The market has had spring on its mind for several weeks now,” said Jay Levine, the president of Enerjay LLC, an energy brokerage in Portland, Maine. “In this case, the price is signaling that the market has little or no fear of future supply versus demand.”

Gas futures for March delivery fell 6.4 cents, or 1.6 percent, to $4.04 per million British thermal units on the New York Mercantile Exchange, the lowest settlement price since Nov. 18. The price has declined 25 percent in the past 12 months.

Commodities settled as follows:

Precious metals: April gold up $15.90 to $1,364.10 an ounce March silver up 92.8 cents to $30.271 an ounce April platinum up $17.70 to $1,861.90 an ounce March palladium up $19.40 to $838.45 an ounce

Livestock: April live cattle down 0.5 cent to $1.1125 a pound March feeder cattle down 0.325 cent to $1.2425 a pound April lean hogs down 0.575 cent to 91.25 cents a pound February pork bellies unchanged at $1.13 a pound

Grains: March soybeans up 9.75 cents to $14.3425 a bushel March corn down 1 cent to $6.7375 a bushel March wheat up 15.5 cents to $8.7425 a bushel March oats down 1.5 cents to $4.195 a bushel

Food and Fiber: March coffee down 2.15 cents to $2.476 a pound May cocoa up $21 to $3,260 a metric ton March cotton up 0.78 cent to $1.7529 a pound March sugar down 1.52 cents to 31.16 cents a pound March orange juice down 1.85 cents to $1.7065 a pound

Energy: March crude oil down 54 cents to $86.94 a barrel March natural gas down 6.4 cents to $4.04 per million British thermal units March heating oil up 2.57 cents to $2.7318 a gallon March gasoline up 4.37 cents to $2.4942 a gallon

Others: March copper down 0.1 cent to $4.574 a pound March lumber up $3.30 to $301.90 per 1,000 board feet

To contact the reporter on this story: Pham-Duy Nguyen in Seattle at pnguyen@bloomberg.net.

To contact the editor responsible for this story: Steve Stroth at sstroth@bloomberg.net

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