Reuters - 3/5/2006

Oil nudged closer to $75 a barrel Tuesday and gold and silver stayed at multi-year highs as Iran raised more fears about its nuclear ambitions when it threatened to attack Israel in response to any "evil" act from the West.

Top industrial metal copper fell as investors took profits the day after a rally. Corn and soybeans also closed down on funds selling while wheat rose on crop concerns.

The Reuters/Jefferies CRB Index which tracks 19 commodity futures from livestock to metals, cotton, grains, softs, frozen orange juice and energy, unofficially ended up 0.51 percent at 357.02 points.

"I think a lot of what's in here today is safe-haven interests because of higher oil," Jimmy Quinn, commodity market commentator at AG Edwards, said.

Oil breached $74 a barrel, heading toward its April record of $74.35, as U.N. ambassadors from the United States, Britain and France were expected to introduce a Security Council resolution this week to force Iran to stop uranium enrichment.

Iran says it is enriching uranium for energy purposes. The West does not buy that story, saying it is a front for making atomic bombs.

If Iran, the world's 4th largest oil exporter, ignores the Security Council, it could face sanctions on crude exports, hitting a world market already tight on supply. Prospects of an Iran-U.S. confrontation is also spooking the oil trade, driving up prices.

Iran's deputy oil minister, Mohammad Hadi Nejad-Hosseinian, upped the ante for a showdown when he said Tuesday there was "some possibility" of a U.S. attack over the nuclear program.

He also warned crude oil prices could exceed $100 a barrel by winter as supply cannot be boosted in the short term.

Iran threatened to attack Israel in response to any "evil" act by the United States and said it had enriched uranium to a level close to the maximum compatible with civilian use in power stations.

U.S. light crude closed 91 cents up at $74.61 after hitting an intraday high of $74.90. London Brent crude hit a high of $74.64, up $1.08 from Monday.

Gold for June delivery on the New York Mercantile Exchange was up $7.20 an ounce at $667.40. It set a new 25-1/2 year high at $669.30 per ounce.

A fresh pullback in the U.S. dollar after overnight gains also gave gold more sparkle, dealers said.

The euro was at $1.2619 to the dollar in midafternoon trade in New York, up 0.3 percent on the day after touching a high of $1.2667 earlier.

Silver rose on the continued strength of the newly-launched Barclays Global Investors' exchange-traded fund for futures, called iShares Silver Trust ETF. Each share is worth 10 ounces of silver bullion.

"We're watching the volume on the ETF," said a silver trader. "We're keeping an eye on that."

July delivery silver jumped 24.50 cents to $14.21 an ounce, in a range extending from $14.00 to $14.26.

U.S. copper futures settled lower as the market consolidated from Monday's 3.1 percent rise, while volumes remained light amid a lack of participation from funds.

Benchmark July copper lost 4.40 cents to settle at $3.2765 a lb. after dealing between $3.23 and $3.34.

London Metal Exchange's three-month copper settled up $130 at $7,130 a tonne.

Corn for May was down 4-3/4 cents to $2.33-1/4 per bushel. July delivery fell 4-1/2 cents at $2.43-1/2 per bushel. Dealers said the market was pressured by the active pace of U.S. corn plantings and profit-taking after a recent fund-led rally.

Soybeans for May were down 2-3/4 cents at $5.90-1/2 per bushel. July delivery was down 3-3/4 cents at $6.03. Soy was hit by cross-action that spilled over from corn and late funds selling, dealers said.

Wheat for May was up 2 cents at $3.55-1/4 per bushel on concerns about the size of the hard red winter crop. July wheat rose 1-1/2 cents to $3.66-1/2.