Budget woes bolster gold

Gold prices leapt to a two-week high on Friday, trading as high as $1,546 per ounce. Gold climbed $60 per ounce (+4.3 percent) over the last week, as investors worldwide reacted to continued concerns about government debt worldwide. Focus recently has shifted away from Greece onto larger, more indebted nations, like Portugal, Italy, Ireland, Spain and, even the United States. These nations have enormous outstanding debt, lackluster economic growth, and populations that oppose raising taxes, leaving policy makers with limited solutions.

Lack of faith that governments, both domestic and abroad, will be able to solve their problems of overspending and overwhelming debt has pushed investors to run from paper currencies toward hard assets, especially gold, which has multiplied six fold in price over the last decade. Gold traders will be closely watching budget negotiations over the coming weeks and months, searching for signs of indebted nations' solutions to their problems.

Sugar surges

Sugar prices rushed higher this week, reaching a four-month high. The primary factor behind sugar's rally has been a diminishing crop out of Brazil, the world's largest exporter. Typically, Brazil produces 20 percent of the world's sugar, but droughts have severely reduced expectations for the upcoming harvest.

Production in the Center South, Brazil's largest growing area, may drop by as much as 61 million metric tons (-10 percent) compared to previous estimates. Despite rumors that the Brazilian government might decrease sugar-based ethanol production, sugar climbed every day this week.

Sugar for October delivery reached 29.74 cents per pound on Friday morning, up 44 percent over the last two months. Nearly one in ten calories consumed worldwide comes from sugar, so rising prices in that market can have a significant impact on consumers, especially in developing countries, where a large portion of disposable income is spent on food.

Corn comes back

After the unprecedented sell-off in the corn market last week, corn recovered mildly, gaining back about half of what was lost. By midday Friday, corn for July delivery was trading near $6.65 per bushel, buoyed by foreign purchases of U.S. corn. As prices fell last week, foreign countries like China, Egypt and South Korea took advantage of lower corn prices, buying the U.S. grain to feed their growing populations.