LONDON - Oil prices rallied this week as traders tracked talks on Iran’s nuclear programme and news of tighter US supplies, while cocoa futures hit two-year highs.

Precious and base metals fell on disappointing Chinese economic data and a weaker dollar, traders said.

OIL: Crude prices advanced as traders reacted to developments over Iran, the outlook for Federal Reserve stimulus and data out of the United States and China. Talks over Iran’s controversial nuclear programme entered a third day on Friday and with markets uncertain of a deal being struck. Oil prices meanwhile won strong support on Thursday, with Brent closing up two dollars, thanks in part to solid US economic data, traders said.

Talks are taking place in Geneva between six world powers and major oil producer Iran over its nuclear energy programme, which the West sees as a cover for weapons development. Tehran denies the accusation.

The meeting is a third round of talks since Iranian President Hassan Rouhani was elected in June and are seen as the biggest hope in years in resolving the decade-old stand-off. “Brent crude gained ground... with market participants waiting on the outcome to Geneva talks on the Iranian nuclear programme,” said Andrey Kryuchenkov, commodities analyst at financial group VTB Capital.

WTI meanwhile profited from tighter US supplies and rising manufacturing activity in the world’s biggest economy, traders said. The United States on Friday said it still hopes that negotiations in Geneva will reach an accord on Iran’s nuclear programme.

“We hope that an agreement can be reached,” said White House spokesman Jay Carney. “The Iranians decided they were not able come to an agreement in the previous round, but we remain hopeful that we can reach an agreement with all of our P5+1 allies and the Iranians in Geneva.”

According to a draft proposal, the United States, Britain, China, France, Russia, and Germany—the P5+1 -- want Iran to freeze for six months key parts of its nuclear programme.

In return Iran would get minor and, Western officials insist, “reversible” sanctions relief, including unlocking several billion dollars in oil revenues and easing trade restrictions on precious metals and aircraft parts. Oil traders reacted also this week to minutes of the last Federal Reserve meeting, which showed the US central bank has considered the possibility of tapering its huge stimulus programme in the coming months.

The minutes were published on Wednesday and after the Department of Energy said US commercial crude inventories had risen 400,000 barrels last week—lower than market expectations of a gain of 700,000 barrels.

The United States is the world’s biggest consumer of crude. In China, the largest user of energy, manufacturing data has slowed in November according to data published on Thursday.

By Friday on London’s Intercontinental Exchange, Brent North Sea crude for delivery in January jumped to $110.33 a barrel from $107.88 a week earlier.

On the New York Mercantile Exchange, West Texas Intermediate or light sweet crude for January gained to $94.69 a barrel from $93.83.

PRECIOUS METALS: Gold prices, and sister metal silver, tumbled in reaction to US stimulus expectations.

Gold is seen as a hedge against inflation, which some argue could be pushed higher by the Federal Reserve’s huge bond-buying programme.

“The publication of the minutes of the latest meeting of the Federal Reserve prompted investors to sell gold and silver on a grand scale,” said analysts at Commerzbank. By late Friday on the London Bullion Market, the price of gold slid to $1,246.25 an ounce from $1,287.25 a week earlier.

Silver dropped to $19.93 an ounce from $20.63. On the London Platinum and Palladium Market, platinum slipped to $1,396 an ounce from $1,438. Palladium retreated to $721 an ounce from $729.

BASE METALS: Industrial metals were mixed as a weaker dollar offset downbeat Chinese data, making commodities cheaper amid slack demand. “A weaker dollar has been the main factor lending support to the base metals,” said Standard Bank analyst Leon Westgate. The dollar fell Friday on profit taking following strong US economic data the previous day.

Also on Thursday, HSBC bank said its preliminary purchasing managers’ index of manufacturing came in at 50.4, down from a final reading of 50.9 in October, which was a seven-month high.

The figures—the result of weaker export orders—threw a cloud over prospects for the Chinese economy. A reading above 50 indicates growth, while anything below signals contraction.

By Friday on the London Metal Exchange, copper for delivery in three months rose to $7,077.75 a tonne from $6,965.50 a week earlier.

Three-month aluminium climbed to $1,793 a tonne from $1,784.50

Three-month lead grew to $2,108 a tonne from $2,089.

Three-month tin dipped to $22,845 a tonne from $22,900.

Three-month nickel dropped to $13,560 a tonne from $13,712.

Three-month zinc advanced to $1,909.50 a tonne from $1,885.

COCOA: Prices jumped on tight supplies of the raw material.

“Cocoa is a rare exception in the commodities sector as a whole, where prices are under pressure across the board as a result of what are in some cases considerable supply surpluses. The cocoa market, by contrast, exhibits a supply deficit,” Commerzbank said in a note to clients.

Prices reached the highest points since September 2011, at $2,820 a tonne in New York and £1,788 a tonne in London deals.

By Friday on LIFFE, London’s futures exchange, cocoa for delivery in March advanced to £1,758 a tonne from £1,713 a week earlier. On ICE Futures US, cocoa for March climbed to $2,784 a tonne from $2,675 a week earlier.

COFFEE: Futures stretched their recovery from recent multi-year low points that were triggered by the prospect of sizeable harvests. Forecasts of record output in several main coffee-producing countries—Brazil, Colombia and Vietnam—had sent prices plummeting on world markets in recent weeks.

However, “prices are currently finding support from several sides”, noted analysts at Commerzbank.

“Robusta achieved particularly strong gains on the back of reports of heavy rainfall, flooding and associated harvesting problems in Vietnam.

“At the same time, Vietnam exported considerably less coffee in October than in September—an indication that coffee is being withheld in a bid to shore up the price, and that the state is planning to stockpile coffee,” they added. By Friday on the ICE Futures US exchange in New York, Arabica for delivery in March grew to 111.70 US cents a pound from 106.60 cents a week earlier. On LIFFE, Robusta for January rallied to $1,608 a tonne from $1,459 a week earlier.

SUGAR: Prices were mixed amid strong supplies. By Friday on the ICE Futures US exchange, the price of unrefined sugar for delivery in March dropped to 17.44 US cents a pound from 17.61 cents a week earlier. On LIFFE, the price of a tonne of white sugar for March nudged higher to $466 from $465.90 a week earlier.

GRAINS AND SOYA: Soya grew on solid Chinese demand, while maize recovered from a three-year low on Monday amid ample US supplies of the cereal, traders said. By Friday on the Chicago Board of Trade, January-dated soyabean meal—used in animal feed—jumped to $13.11 a bushel from $12.80 a week earlier.

Maize for delivery in December edged higher to $4.225 a bushel from $4.220.

Wheat for December grew to $6.50 a bushel from $6.44.

RUBBER: Prices slipped on a lack of demand. The Malaysian Rubber Board’s benchmark SMR20 dropped to 230.35 US cents a kilo from 231.00 cents the previous week.