Metal prices went through the roof this week with copper, platinum and zinc reaching record highs, while gold and silver touched 25 and 22 year peaks respectively.
The price surge was not confined to metals, with refined white sugar futures in London also reaching a record high of $480.5 a tonne this week. Oil prices also rose 3 per cent this week to a near two-month high to consolidate their position above $66 a barrel.
However, the commodity price rally took a breather at the end of the week, with most markets easing off their record highs.
The common link between products as disparate as copper, gold, oil and sugar is the rush of funds flowing into the commodity markets that has helped push prices to record or long-term highs. The outlook for another year of above trend global economic growth has attracted investors to commodities as industrial demand for raw materials, copper, zinc and sugar increase with faster economic growth.
“There is so much money being thrown at the metal markets,” said Jon Bergtheil, global metals strategist at JPMorgan.
Mr Bergtheil said, however, that investors have been selective by buying metals which have the tightest supply and demand balance such as copper and zinc.
Copper touched a record high for the seventh successive day when it reached $5,510 a tonne on the London Metal Exchange on Friday, just a day after moving through $5,400 for the first time ever. Copper eased from its peak to trade at $5,468 a tonne in late London trade.
The red metal has risen 25 per cent so far this year, and has more than tripled in the past four years on dwindling global stockpiles in registered warehouses of the three key futures exchanges where copper is traded. The current level of inventories equate to about three weeks of global consumption.
The three-month LME zinc price struck a record peak of $2,715 a tonne on Friday, representing a 42 per cent rise so far this year. The price has more than doubled in the past six months while zinc inventories at LME-registered warehouses have fallen 27 per cent in the past three months.
Mr Bergtheil said no significant increase in zinc production was expected for another two years, signalling that the zinc market could become tighter and therefore push price highs if current demand growth remains intact.
In contrast, aluminium, lead, nickel and tin are well below record highs because their inventories are not near the critically low levels that copper and zinc are experiencing.
Platinum, which is mainly used in autocatalysts and has seen demand outpace supply for eight of the past 10 years, reached a record $1,093 a troy ounce – making it one of the most expensive metals on the planet.
The rise in the gold price to a 25-year high of $588.70 a troy ounce on Friday was partly due to fears of rising inflation. Gold eased to trade at $583.50 in late London trade.
Silver, which has been outshining gold this year with its price rising faster than its more illustrious cousin, moved close to breaking the $12 an ounce mark for the first time in 22 years. It touched a intra-day high of $11.91 on Friday before slipping to $11.57.
That still represented a near 7 per cent rise on the week and 31 per cent gain for the year to date. It was up more than 60 per cent in the past year.
Investors have flocked to silver ahead of an expected US listing of a silver-backed exchange traded fund, a type of investment that has already proved popular for gold.
IPE Brent for May delivery slipped 14 cents to $66.32 a barrel in late afternoon London trade. May West Texas Intermediate slipped 48 cents to $66.37 a barrel in electronic trade, having reached a near two-month high of $67.15 a barrel in the previous session.
