COMMODITIES-Gold and cocoa rally, other U.S. markets quiet after snowstorm

Barani Krishnan
Friday, 3 Jan 2014 | 12:55 PM ET

NEW YORK, Jan 3 (Reuters) - Gold hit two-week highs and cocoa also rallied while many other commodities were down or little changed on Friday after a snowstorm hit the east coast of the United States, keeping traders from their desks and thinning market volumes. A firmer dollar also weighed on demand for commodities priced in the U.S. currency from holders of the euro . The dollar firmed as global markets were mixed ahead of a speech by Federal Reserve chairman Ben Bernanke that could indicate when the central bank was likely to make deeper cuts in its economic stimulus policy. The 19-commodity Thomson Reuters/Core Commodity CRB index was down 0.2 percent by 12:30 p.m. ET (1730 GMT) as a heavy snowstorm and dangerously low temperatures hit the northeastern United States, delaying flights, paralysing road travel and closing schools and government offices.

For the week, the CRB was headed for a drop of more than 2 percent, its worst weekly slide in two months, after factoring in losses in three of the past four trading sessions. "The outlook for commodities isn't all that great in 2014, and with the confluence of the snowstorm and back-to-back holidays, it isn't surprising that we're seeing a slow trot into the new year," said Adam Sarhan, president at Sarhan Capital, a New York-based financial advisory. Gold rose to a two-week high as the precious metal saw fresh buying after hitting a six-month low earlier this week. Weaker global demand for equities since the start of the year also helped bullion recapture some its faded allure as a safe-haven asset. The spot price of bullion was up 1 percent at around $1,237 an ounce after hitting $1,238.70 earlier - its highest since Dec. 18. It was on course for a 2 percent weekly gain. Gold's gains came after it lost nearly 30 percent in 2013, ending a 12-year bull run, largely due to Fed's move to unwind its long-running monetary stimulus. Cocoa futures rebounded in both New York and London trading after hitting seven-week lows in the previous session. "It was looking oversold," a London-based cocoa broker said, explaining the rebound. The front-month March cocoa contract in New York was up 2.4 percent at $2,699 a tonne. London's March cocoa was also up 2.4 percent, at 1,717 pounds a tonne, after sliding to a Dec. 18 low of 1,674 earlier on Thursday. Fundamentally, the outlook for cocoa had improved with many traders predicting a sharp tail-off in cocoa arrivals at ports in top growing country Ivory Coast in the coming weeks because of drier than normal weather.

(Editing by Grant McCool)