Grains and gold prices rose on Thursday, while most other commodities fell despite the dollar's drop and the resolution of a U.S. budget deal, with U.S. oil prices sliding to their lowest since July after industry data showed supply on the rise.
Gold held onto 3 percent gains throughout the session as the dollar tumbled on Thursday following the U.S. congressional deal to restart the government and avoid a federal debt default.
Late on Wednesday, the U.S. Congress approved an 11th-hour deal to end a partial government shutdown and pull the world's biggest economy back from the brink of a debt default that could have threatened financial calamity.
The precious metal rode up to a 10-day peak, driven by the dollar's declines and the belief that a temporary deal to avoid an historic U.S. debt default might prompt the Federal Reserve to delay tapering its monetary stimulus program.
Spot gold rallied to a session high of $1,324.06 per ounce, up more than 3 percent on the day. By 3:55 a.m. EDT (1955 GMT), it was still up 2.98 percent at $1,319.21. December COMEX gold futures hit a high of $1,324.20 and settled up $40.70 at $1,323, a near 3 percent gain, with trading volume about 30 percent above its 30-day average, Reuters data showed.
"The U.S. debt deal is seen (as) positive for gold, since the whole mess is just being postponed by three to four months, which makes a reduction of Fed asset purchases rather unlikely for the time being," Commerzbank analyst Carsten Fritsch said.
The dollar slid to its lowest in more than eight months against the euro as currency markets focused on the impact of the government shutdown and the likelihood that Federal Reserve stimulus will stay in place.
The deal did not resolve the fundamental issues of spending and deficits that divide Republicans and Democrats.
The two-week shutdown and acrimonious debate over raising the U.S. debt ceiling have knocked investor and business confidence, denting growth prospects for the world's largest economy, analysts said.
"Increasingly I'm of the view that the reason why our economy can't kick into a higher gear is because of the uncertainty created by Washington," said Mark Zandi, chief economist of Moody's Analytics.
In the Thomson Reuters-Jefferies CRB benchmark, 12 of 19 commodities fell. The index lost 0.41 percent, with losses in energy, industrial metals, and some agricultural markets.
Brent crude oil fell 1.7 percent to a one-week low. U.S. futures slid to their lowest since early July, as stockpiles in the Cushing, Oklahoma oil hub reversed a months-long decline and as signs of progress in talks over Iran's nuclear program pressured prices.
Front-month December Brent crude settled $1.48 lower at $109.11 per barrel. U.S. oil ended $1.62 per barrel lower at $100.67, the lowest settlement price since July 2.
"We have an enormous amount of crude oil production worldwide, especially here, and tepid demand growth," said Sarah Emerson, managing director of Energy Security Analysis Inc in Wakefield, Massachusetts. "We're in a surplus market and that surplus is definitely going to start weighing on prices."
U.S. soybean futures staged their strongest rally in five weeks and wheat posted the steepest gain in a week, spurred by technical and bargain buying as the U.S. government returned to work and the dollar fell.
USDA said it was cancelling a delayed release of the October crop production report originally scheduled for October 11 because there has not been enough time to gather data. The next USDA crop report is set for release on November 8.