FXS: Copper Gains On Fed Plan; Gold Attracts Nervous Investors
Copper Gains On Fed Plan; Gold Attracts Nervous Investors
LONDON (Dow Jones)--Base and precious metals prices were up Tuesday, with copper and the industrial metal complex rebounding from their lows, while gold continued its gains from the start of the week.
Financial market sentiment was boosted by news of the U.S. Federal Reserve's commercial-paper funding facility aimed at improving liquidity, which helped the base metals rise and caused the dollar to weaken against the euro.
At 1447 GMT LME copper was trading at $5,635 a metric ton, up 1.3% from Monday's kerb close. Spot gold was trading at $878.70 a troy ounce, up 2.5% from Monday's close.
"Copper rose on the back of a new special vehicle the Fed is launching on the hope it will break the log jam in the credit market," said BaseMetals analyst Will Adams.
Meanwhile, gold climbed early in the day and then oscillated with the dollar and equities. Equities initially climbed on the Fed commercial paper news, but then reversed gains amid general unease in the financial markets.
The gains Tuesday came on the heels of Monday's plunge, with the Dow Jones Industrial Average having its largest intraday point decline in its history.
"The external drivers of the gold price are set to once again evolve favorably for gold and expose prices to further price gains," said Barclays Capital analyst Suki Cooper. Barclays forecasts a U.S. rate cut in October and foreign exchange strategists forecast the dollar will fall towards $1.42 to the euro.