This is an archived article that was published on sltrib.com in 2010, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.
St. Louis • From gold to grains to oil, commodities finished 2010 at or close to their highest levels in years.
Gold closed Friday at $1,421.40 an ounce, up roughly 31 percent for the year after an almost uninterrupted climb since January. Grains and soybeans capped off a rally that started this summer, and oil prices ended the year at levels many analysts considered unachievable just six months ago.
The jump in commodity prices has been driven by China's seemingly insatiable demand for raw materials and speculators betting that they could profitably ride the momentum higher. Analysts expect the price increases, and volatility, will continue well in 2011.
"People are looking to get out of the dollar, and stocks have run up so much that commodities are looking like a good alternative," said Spencer Patton, founder and chief investment officer for hedge fund Steel Vine Investments LLC.
Gold was the clear standout in 2010. It traditionally has been viewed as a classic shelter investment, often used as a hedge against inflation. That kept it idling for much of the decade before the global financial crisis emerged in 2008. Then, as central banks started taking dramatic actions to stimulate their economies, gold starting moving higher as interest rates dropped to record lows and some currencies fell in value. That led some investors to predict higher inflation is inevitable. Other precious metals, like silver, also moved higher.
Industrial metals, used to make everything from computer parts to automobile engines, also gained as global consumption and manufacturing started to recover. Copper surged more than 40 percent, rising from just over $3.00 a pound to close the year at $4.4470.
Raw commodity ingredients, which also rose in price, account for only a fraction of the price of food at the grocery store, so it can take months if not longer for commodity price increases to hit consumers. But food makers like Hormel Foods Corp. have said they will be hiking prices on a variety of products in 2011 to recoup costs.
Commodity prices closed out the last trading day of 2010 with across-the-board increases.
Gold for February delivery rose $15.50 to settle at $1,421.40, and copper for March delivery climbed 8.45 cents to $4.4470. Silver contracts for March delivery rose 42.4 cents to $30.937 an ounce. January palladium settled up $17.10 at $803.30 an ounce and December platinum gained $29 to close at $1,773.30 an ounce.
Grains and soybeans also closed Friday higher. March wheat rose 9.5 cents to settle at $7.9425 a bushel, March corn rose 13 cents to $6.29 a bushel and March soybeans added 27 cents to close at $14.03 a bushel.