The Reuters/Jefferies CRB index rose 5.3% to 225.3, the biggest gain since Dec 31, with every of the 19 commodities climbed.

Oil Price surged to 2.5-month high at 52.98 before closing at 52.04 (+4.8%) Thursday, driven by hopes for faster economic recovery and weaker dollar. The benchmark futures will likely record a 5th consecutive weekly rise since mid-February. Moreover, the 10% gain this week is the biggest since April 2008.

The Fed's pledge to spend $1.5 trillion in purchase of US Treasury, MBS and other debts continued to stimulus investors' risk appetite. With this plan, the Fed's balance sheet will probably be expanded to $3.5-4 trillion from $1.95 trillion in early March. However, it will add a few percentage to the nation's GDP if the money 'created' are translated into new lending.

Although several agencies have revised down oil demand forecasts in 2009, previous production cuts as well as high compliance by OPEC helped tighten the market as evidenced by flattening in the forward curve. According to Oil Movements, OPEC will cut crude oil shipments by 3.3% in the 4 weeks ending April 4. In February, the cartel's compliance was around 80% and a higher level will be achieved in March. However, there's risk that some members will be less-disciplined as oil price soars.

Natural gas price gained 13% to settle at 4.174, the biggest rise in 29 months. Storage in the US declined 30 bcf, above market expectation of 26 bcf draw, to 1651 bcf for the week ended Mar 13. Although the better-than-anticipated reduction in stockpiles is less than the 85 bcf draw in 2008 and 45 bcf draw in 5-year average, it indicated some tightening in the supply/demand balance. In fact, we believe the price rally was also spurred by the Fed's plan and price increase in other commodity prices.

The dollar's decline accelerated after Fed's announcement and the dollar index slid 1% to 83.09 yesterday following a 3% decline a day earlier. After making a 3-year high at 89.62 on Mar 5, the gauge has plummeted by more than 7.3%. The Fed's plan to massively expand the supply of dollar by buying government bond turned investors away from the safe haven. Euro, as well as commodity currencies with Kiwi leading the rally, has risen against the greenback in recent days.

Gold futures surged 7.9%, the biggest rise since September, to close at 958.8 Thursday. During the day, the gauge climbed to as high as 963.5. As inflation expectation grows and both the USD and Swiss Franc are doomed to face significant depreciation, gold and other precious metals such as silver and platinum gain buying interest.

Silver for April delivery rallied 13%, the most since 1979, to 13.5 while the platinum contract gained 7.6% to 1222 Thursday. Apart from investment demand, platinum's rally was boosted by the $5B additional financial assistance program to automakers in the US.