Commodities rallied Thursday as investors sought protection from the tumbling dollar, which slid to new lows after a surge in unemployment claims raised concerns about the health of the U.S. job market, AP reported. Oil surged to a peak; precious metals and agriculture futures rose, while industrial metals ended mixed. The euro purchased a record $1.4309 on Thursday, while other currencies also strengthened versus the greenback. The dollar's drop came as the Labor Department reported a sharp rise in claims for unemployment benefits last week, unnerving investors who have seen the job market as one the economy's stronger points and an offset to the deteriorating housing market. Investors often turn to commodities to hedge against a weak dollar on the premise that raw materials such as copper or platinum tend to hold their underlying value relative to all currencies. Also, because commodities are bought and sold in dollars, foreigners see U.S. prices at a discount as their currencies gain force. Light, sweet crude for November delivery settled at a record $89.47, up $2.07 a barrel on the New York Mercantile Exchange. Gold futures for December jumped $6.40 to settle at $768.70 an ounce, while silver futures rose 5.3 cents to $13.803 an ounce. An anemic earnings report from Bank of America Corp., the nation's second-largest bank, renewed concerns about the credit markets and added to the pressure on the dollar. The bank posted a 32 percent drop in third-quarter profit on trading losses and writedowns stemming from the problems that racked the credit and financial markets over the summer. «The rallying gold price is a reflection of further erosion in dollar confidence,» said Ashraf Laidi, chief foreign exchange analyst with CMC Markets U.S., in a report. Jobless claims reached 337,000 last week, up 28,000 from the previous week, the Labor Department said. The increase was more than four times the increase of 6,000 economists expected. The data follows the Commerce Department's report Wednesday showing construction of new homes plummeted to the lowest level in 14 years in September. Laidi cautioned that the current gold rally may be inflated by speculative activity due to a sharp rise in the number of long positions in the market. Other analysts have made the same claim about energy futures, which have seen investors' long positions swell in recent weeks. A long position is a bet prices will climb. Meanwhile, the dollar may have further to fall. Market expectations have solidified for another reduction in the Federal Reserve's benchmark federal funds rate, as worries about a still-bottomless housing slump have mounted. Fed fund futures point to a more than 70 percent chance of a quarter-point rate cut when the Fed meets Oct. 30-31. Energy prices climbed broadly, with oil leading gains in gasoline and heating oil. Although the Energy Information Administration reported an unexpectedly large increase in inventories of crude and gasoline on Wednesday, some analysts say higher prices are supported by a longer-term decline in oil supplies globally. In a report, Barclays Capital analyst Kevin Norrish points to four straight quarters of global inventory draws and the likelihood of two more quarterly declines to come. November gasoline rose 3.85 cents to settle at $2.1851 a gallon, while heating oil picked up 3.04 cents to $2.3493 a gallon on the Nymex. Elsewhere, agriculture futures climbed on the Chicago Board of Trade. Soybeans for November delivery jumped 17.25 cents to $9.915 a bushel, while December corn prices added 9.25 cents to $3.6725 a bushel. December wheat rose 5 cents $8.255 a bushel. Overseas, industrial metals finished in a range, with nickel and lead prices rising on the London Metal Exchange. Copper fell in London and slipped 5.45 cents to end at $3.5415 a pound on the Nymex.
