By Anna Stablum Nov. 20 (Bloomberg) -- Copper may fall in New York and London, paring this week’s gain, on a rebound by the dollar and on concern that demand may weaken after stockpiles increased for a 19th week. The U.S. Dollar Index,, a gauge of the greenback’s strength against six counterparts, rose as much as 0.8 percent, the most since Nov. 17. A stronger dollar makes commodities denominated in the currency more expensive for investors holding other monies. Inventories monitored by the London Metal Exchange gained for a 14th day today. “Prices are coming off as the dollar is rebounding,” Dan Smith, an analyst at Standard Chartered Plc in London, said by phone. Copper for March delivery was little changed at $3.105 a pound on the New York Mercantile Exchange’s Comex division at 8:30 a.m. local time after gaining as much as 1.1 percent. The contract is heading for a 3.5 percent weekly gain, which would be the third in a row. Copper for three-month delivery slipped 0.1 percent to $6,789 a metric ton on the LME. Inventories monitored by the LME rose 0.3 percent to 421,875 tons today, the most since April 27. “We need to see inventories coming down before prices could move higher again,” Eliane Tanner, an analyst at Credit Suisse Group AG in Zurich, said by telephone. “We expect prices to fall a little bit over the next few days.” ECB Cash Copper also retreated as European Central Bank President Jean-Claude Trichet said the ECB will gradually withdraw emergency cash it has pumped into the economy to ensure it doesn’t fuel inflation. “It is no surprise that central banks will start to withdraw liquidity, but this will undermine risky assets and put downward pressure on metals prices,” Standard Chartered’s Smith said. A weaker dollar has helped copper to more than double this year, along with record first-half imports into China, the biggest user, and expectations of revived demand as the world recovers from the worst recession since World War II. Global commodity demand will rebound in 2010’s first half as China leads consumption, according to Macquarie Securities Group. “The leap in demand for commodities in China this year has been quite staggering,” Macquarie analyst Jim Lennon said today at a conference in Hong Kong. “You can see where these commodities are going by the increase in production in China of goods like autos.” Record Investment Commodities will likely attract a record $60 billion this year as investors seek to diversify assets, Barclays Capital said. Inflows so far this year are almost $55 billion, already above the prior annual record of $51 billion set in 2006, it said in a report. Total commodity assets under management will probably expand to $230 billion to $240 billion by the end of the year, it said. Among other LME metals for three-month delivery, tin gained 0.6 percent to $14,950 a ton. The so-called backwardation, when metal for nearby delivery trades at a premium to the three-month price, fell to $28 a ton yesterday, the lowest since June 23, according to LME data. The premium climbed to $730, a five-year high, on Sept. 22. Stockpiles of tin in LME warehouses have more than tripled this year to 26,940 tons. Aluminum fell 0.7 percent to $2,017 a ton, and nickel shed 1.5 percent to $16,715 a ton. Zinc added 0.7 percent to $2,230 a ton, and lead climbed 0.2 percent to $2,335 a ton. To contact the reporter on this story: Anna Stablum in London at astablum@bloomberg.net

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