SINGAPORE – Industrial metals traded close to multi-year highs on Thursday as funds flocked to red-hot commodity markets and a bruised U.S. dollar made copper a more attractive buy for overseas investors.
Star performer zinc, up more than 12 percent since the start of the year, traded around a 7-1/4-year peak and copper crept $10 toward its all-time high of $3,280 a tonne, set 16 years ago.
Demand from fast-growing China shows little sign of abating, with global mining houses reporting double-digit profits as a result of high commodity prices. CVRD and Rio Tinto have bagged a 71.5 percent increase in iron ore contract prices for sales to some Asian steel makers.
Opinion is divided among futures traders and analysts as to how much longer base metals can sustain their bull run.
“The peak is not far away,” a futures trader in Tokyo said. “Long term, I’m bearish.
But a trader in Singapore said: “The funds will continue to push things up. It’s mainly currency-related.”
Funds have flooded into commodity markets to diversify from lower-yielding equities and bonds and to hedge against a weak U.S. dollar, which makes dollar-denominated metals cheaper for overseas investors.
The U.S. currency hit a five-week low against the euro on Tuesday, but has since rallied. On Thursday, it held gains against the yen after a Federal Reserve meeting reminded markets the U.S. could raise interest rates to hold inflation at bay.
Gold drifted lower in Asia as the dollar’s slight recovery prompted light technical selling, but dealers were bullish on gold — which hit a 2005 high of $435.40 in New York trade — as funds continued to be drawn to commodities.
Spot gold traded at $434.60/5.10 an ounce by 0522 GMT.
Source: Muzi News
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