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Commodities prices rallied across the board on Tuesday, with copper and gold hitting all-time highs amid robust demand for emerging markets, and US dollar weakness.
The rally brought the benchmark S&P GSCI spot index, a basket of raw materials, to 616.5 points, the highest level since October 2008. The index, which is heavily skewed towards oil, has risen almost 25 per cent over the past 12 months, triggering concerns about rising inflation in China and elsewhere in developing countries.
“Any weakness in the dollar, which we think is likely to resume its decline . . . will also lead to a renewed buying in commodities,” said Edward Meir, senior commodities analyst at brokerage MF Global in New York.
Precious metals benefited the most from the dollar’s weakness and surging demand for gold in China, where imports have risen by fivefold this year from 2009 levels.
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In London, spot bullion rose to a nominal all-time high of $1,428.15 a troy ounce, up 0.4 per cent from Monday’s last quote in New York. Gold prices have surged 30 per cent so far this year, hitting a series of records. But in real terms, adjusted by inflation, bullion remains well below its all-time high of more than $2,300 an ounce hit in 1980.
Silver prices hit a fresh 30-year high, trading for the second day in a row above the key $30-per-ounce level. In London, the metal rose to an intraday high of $30.42 an ounce, up 0.9 per cent from Monday’s last quote in New York.
Elsewhere in commodities markets on Tuesday, the price of copper for delivery in three months at the London Metal Exchange rose above the $9,000-a-tonne level for the first time amid concerns that demand would outpace supply in 2011.
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In late morning trading in London, LME copper rose 2.3 per cent to $8,985.75 a tonne, having earlier touched a record high of $9,014.00 a tonne.
Other metals also moved higher, with aluminium up 1.6 per cent to $2,345.25 a tonne, zinc up 3.3 per cent up to 2,298 a tonne and lead up 3.1 per cent to $2,427 a tonne.
Amid energy commodities, oil prices consolidated above $90 a barrel. In New York, Nymex January West Texas Intermediate rose 73 cents to $90.11 a barrel while in London, ICE January Brent hit a 26-month high of $92.36 a barrel.
Coal prices continued their climb amid supply disruptions caused by weather in Indonesia and Australia, strong import demand in Asia and restocking in Europe because of cold weather. Thermal coal for delivery in three moths in the European hub of Rotterdam rose 1.4 per cent to $116.68 a tonne, the highest level in two years.
