Commodities zoom again, but profit-takers hit gold

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Prices of many commodities are surging again Tuesday on the potent combination of supply worries and demand from investors looking to hedge against inflation.

When Federal Reserve Chairman Ben S. Bernanke talks about the Fed’s desire to see a bit higher inflation, this can’t be what he had in mind.

The Reuters/Jefferies CRB index of 19 major commodities was up 1.1% to a new two-year high of 318.74 at about 11 a.m. PST. The index has jumped 21% just since the end of August.

Soybean prices were up more than 4% for the day after the government slashed its estimate of U.S. bean inventories in 2011, as surging foreign demand grabs more of the domestic crop.

Copper has topped $4 a pound for the first time in two years, boosted in part by a report showing that Chinese passenger car sales rose in October at the fastest pace in six months. China, of course, sucks up a massive amount of the world’s copper for manufacturing and construction.

In the precious-metals market, gold zoomed as high as $1,424 an ounce, a new all-time high, until profit-takers finally rolled in. The metal was off 80 cents to $1,402 an ounce as the futures session in New York neared the closing bell.

Investor demand for gold has been driven in large part in recent months by the belief that the Federal Reserve’s money-printing campaign would continue to debase the dollar. But on Tuesday the metal’s early rally was stoked by renewed concern about Europe’s financial situation, as Ireland’s debt woes deepen.

For commodities overall, even though some raw materials are at all-time highs (including gold, cotton and sugar), the CRB index remains 33% below its peak of 473.52 reached in July 2008. That was when oil hit a record $145 a barrel -– just months before the financial-system meltdown struck, devastating commodity markets and nearly all other assets.

-- Tom Petruno