By The Associated Press
Commodities prices soared Friday after European leaders surprised markets with aggressive plans to shore up the region's financial system.
Crude oil jumped 9 percent and metals prices rose sharply after a summit in Brussels produced an agreement to funnel money directly to troubled banks, without adding to the debt burdens of struggling governments like Spain.
The deal suggested low interest rates and better prospects for economic growth. The dollar fell as investors ditched defensive investments, another positive factor for commodities.
Gold for August delivery jumped $53.80, its biggest gain since June 1, to settle at $1,604.20.
Expectations were low for definitive action from European leaders at their latest summit. European leaders have had 18 disappointing summits since the start of their debt crisis, and most expected this one to be drab as well.
"The gold market has been very weak leading up to today," James Steel, a commodities analyst with HSBC in New York, said. The progress made at the summit prompted "a very strong turnaround."
Steel also said gold tends to rise when oil prices surge, since managers of commodities indexes that include both will have to buy more gold in order to prevent its weighting in the indexes from shrinking.
Gold's gain came as the dollar slumped 1.8 percent against the euro. The euro soared as investors became more confident that Europe's latest program for stabilizing its banks and keeping its currency union together will work.
Gold tends to move in the opposite direction of the dollar. Investors see gold as a kind of surrogate currency versus the dollar, and often buy it when the dollar weakens, as happened Friday.
Precious metals prices have been weak since late February, when gold went as high as $1,776. Gold closed out June with its first monthly gain after four months of losses. Gold has mainly been slumping because of a gain in the value of the dollar, as investors worried this spring that Europe's currency bloc could splinter.
Other metals also rose sharply. Silver for September delivery rose $1.321 to settle at $27.612 an ounce. Platinum for October delivery rose $63.10 to $1,452.40 an ounce and September palladium rose $20.65 to $584.55 an ounce.
Copper for September delivery rose 16.5 cents to $3.4965 a pound.
In energy trading, crude oil shot up $7.27 to settle at $84.96 a barrel on the New York Mercantile Exchange. It was the biggest gain in more than three years. Oil had plunged around 25 percent from May 1 through Thursday as investors became pessimistic about the U.S. economy and prospects for real progress on Europe's debt crisis.
Other energy contracts also rose sharply.
Heating oil rose 14.41 cents, about 6 percent, to finish at $2.696 per gallon and wholesale gasoline increased 11.3 cents, or nearly 5 percent, to end at $2.7272 per gallon. Natural gas rose 10.2 cents, nearly 4 percent, to finish the week at $2.824 per 1,000 cubic feet.
Prices for grains and beans rose modestly. Corn for December delivery rose 2.5 cents to settle at $6.3475 a bushel, September wheat rose 11.25 cents to $7.5725 a bushel, and November soybeans rose 24.25 cents to $14.2775 a bushel.
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