BLBG: Copper Prices Advance on Rising Investor Demand for Hard Assets
By Millie Munshi and Anna Stablum
Nov. 20 (Bloomberg) -- Copper prices rose, boosted by inflation concerns that made raw materials more appealing as alternative investments.
Commodities likely will attract a record $60 billion this year as investors seek to diversify, Barlcays Capital said yesterday in a report. The Reuters/Jefferies CRB Index has climbed 20 percent this year, heading for the biggest annual gain since 2002. Copper prices have more than doubled, leading the index, driven by investor demand and China’s consumption.
“There’s absolutely demand out there for hard assets,” said Adam Klopfenstein, a senior market strategist in Chicago with Lind-Waldock, a division of MF Global Ltd.
Copper futures for March delivery rose 2.8 cents, or 0.9 percent, to $3.134 a pound on the New York Mercantile Exchange’s Comex unit. That left the metal up 4.5 percent for the week, the biggest advance in four weeks.
Record-low U.S. borrowing costs and increased government spending has amplified concern that inflation may pick up and raised demand for hard assets, especially gold. The precious metal climbed to a record this week.
Copper fell as much as 0.9 percent earlier as a rising dollar made commodities priced in the currency more expensive for investors holding other monies. The dollar touched a 15- month low against a basket of six major currencies on Nov. 16.
Dollar Rebound
“Prices are coming off as the dollar is rebounding,” said Dan Smith, a Standard Chartered Plc analyst in London. The U.S. Dollar Index, the six-currency basket, rose as much as 0.8 percent.
Gains also were limited as inventories monitored by the London Metal Exchange climbed for a 14th straight session, adding 0.3 percent to 421,875 metric tons, the most since April.
“We need to see inventories coming down before prices could move higher again,” said Eliane Tanner, a Credit Suisse Group AG analyst in Zurich. “We expect prices to fall a little bit over the next few days.”
On the LME, copper for three-month delivery climbed $50, or 0.7 percent, to $6,845 a ton ($3.10 a pound). Among other LME metals for three-month delivery, tin, aluminum, lead and zinc prices also gained. Nickel fell.
To contact the reporters on this story: Anna Stablum in London at astablum@bloomberg.net; Millie Munshi in New York at mmunshi@bloomberg.net.
