Commodities gone wild! Prices spike post Fed

chart_ws_commodity_metals_gold.top.pngClick the chart for more on commodities. By Julianne Pepitone, staff reporter


NEW YORK (CNNMoney.com) -- Commodity prices have been on a tear since the Federal Reserve hinted back in August that it was prepared to take aggressive action to help boost the economy. The big announcement finally came, and a day later commodities are staging a massive rally.

The Fed said Wednesday afternoon that it will buy $600 billion of longer-term Treasuries by mid-2011. That caused the U.S. dollar to slide and helped give a giant boost to oil, gold, coffee, sugar and silver.

Commodities remain in the spotlight because the Fed's asset purchases will put pressure on an the already weak U.S. dollar. Since commodities are priced in dollars around the world, a lower greenback makes it cheaper for foreign investors to buy.

"The Fed is basically printing money with these purchases, which weighs heavily on the dollar," said Carlos Sanchez, precious metals analyst at CPM Group. "This is what the commodity market wanted."

Crude oil for December delivery hit a six-month intraday high Thursday, rising above $86 a barrel for the first time since May 3.

But precious metals were shining even brighter. Gold settled at a record high, rising $45.50, or 3.4%, to $1,383.10 an ounce. Silver prices skyrocketed 5% to a 30-year high of $25.68 an ounce.

"Metals are going to keep benefiting from the uncertainty in the markets," Sanchez said. "We expect continued strong demand, especially for gold and silver."

Most of the so-called "consumer" commodities were also sharply higher Thursday, with coffee soaring 5.3%.

But some economists are worried commodities will head even higher in the next few months as a result of the Fed's more aggressive policies. Crude oil prices have jumped 6.3% in the past month alone, while gold is up 5.1% in the same period.

Sugar, cotton, corn and wheat have all hit new highs over the past two months. Those price hikes could start hitting consumers' wallets soon. High cotton prices will translate into higher clothing prices, while an increase in corn and wheat prices could result in higher prices for chicken, meat, pizza, pasta and bread. To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Overnight Avg Rate Latest Change Last Week
30 yr fixed4.29%4.30%
15 yr fixed3.23%3.29%
5/1 ARM3.33%3.45%
30 yr refi4.26%4.27%
15 yr refi3.20%3.26%
Rate data provided
by Bankrate.com
View rates in your area
 
Find personalized rates:
Index Last Change % Change
Dow 16,909.80 -2.31 -0.01%
Nasdaq 4,468.50 25.80 0.58%
S&P 500 1,974.05 4.10 0.21%
Treasuries 2.55 0.09 3.53%
Data as of 2:22pm ET
Company Price Change % Change
Bank of America Corp... 15.55 0.21 1.37%
Facebook Inc 74.79 1.08 1.47%
Genworth Financial I... 14.13 -2.13 -13.10%
Pfizer Inc 29.38 -0.09 -0.32%
Yahoo! Inc 36.71 1.03 2.89%
Data as of 2:07pm ET

Sections

French toast with enough saturated fat to last a week, a burger with more than three days worth of sodium and a stack of seafood with more than a day's worth of calories top this year's Xtreme Eating list. More

The economy is strengthening but the Federal Reserve is sticking to its plan to gradually cut back on stimulus. There were no hints about when a rate hike may be coming. More

Restrictive immigration policies prevent talented entrepreneurs from launching businesses in the U.S. So, they're moving to Canada. More

Steve Mason, a pastor from California, inherited more than $100,000 in student loan debt when his 27-year-old daughter died suddenly in 2009. With interest and late penalties, the debt has since ballooned to $200,000. More

Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.