Commodities Across the Board Reach Record Highs

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"Despite a pullback, precious metals and commodities are expected to rise further, 'as long as there's cheap money out there and as long as QE2 is ongoing.'"

Gold, corn and tin all hit record highs on Monday, supported by a weaker dollar and fears of inflation, but slipped back after news of another powerful earthquake in Japan.

Silver touched its highest in 31 years, lead hit a three-year peak and oil reached fresh 2-1/2-year high as investors worried about inflation and future supplies, before following other commodities lower.

A strong quake estimated at up to 7.1 magnitude hit northeast Japan on Monday, rattling the area one month after a quake and tsunami killed thousands.

The quake helped turn commodity markets that had been focusing on supply shortages as global growth accelerated and ahead of expectations of a bumper corporate earnings season.

News of the quake rattled investors and raised the possibility of lower-than-expected demand from Japan.

Rising raw material prices have already prompted rate rises by the European Central Bank and People's Bank of China, and helped put pressure on the dollar.

Interest rate differentials and uncertainty over the U.S. Federal budget have helped drive down the value of the dollar by more than 5% this year.

The U.S. currency rallied in early U.S. trade on Monday, moving back to an unchanged position against a basket of currencies.

After climbing to a record high of $1,476.21 an ounce, spot gold eased back to around $1,469 at 1230 GMT, down around $3 on the day, while silver hit its highest since early 1980 at $41.93 and was later at $41.12 an ounce against $40.85.

Despite the retracement, dealers said upward momentum appears intact for most commodities.

"As long as there's cheap money out there and as long as QE2 is ongoing, I don't think any of these markets have got problems," said Lars Steffensen, managing partner of Ebullio Capital Management.

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