Copper, aluminium and lead on Wednesday hit their highest levels in more than a year, boosted by a combination of strong investor flows, a weaker US dollar and signs of strong economic growth in China and elsewhere in Asia.
JBC Energy, the Vienna-based consultancy, said that the speed at which commodities markets had recovered “from news about Dubai World’s delayed debt has been remarkable”.
On the London Metal Exchange, copper for delivery in three months rose to a 14-month high of $7,170 a tonne. It later pared gains, but still gained 1.2 per cent to $7,145 a tonne.
Copper, the base metals’ bellwether, has risen more than 130 per cent this year and is on course to record its biggest annual increase in more than 30 years, according to Reuters data.
“A raft of positive macro-economic data over the past 24 hours is the likely exegesis of the further gains we have seen in metals prices,” said Gayle Berry, a base metals analyst at Barclays Capital.
Aluminium jumped to $2,165.25 a tonne, its highest level since October 2008. It later traded at $2,155 a tonne, up 2.4 per cent on the day.
The rally is forcing some contrarian investors, who bet on a price fall due to large inventories, to capitulate, traders said. Lead prices rose to $2,525 a tonne, their highest level since May 2008. Zinc, nickel and tin also posted gains.
Gold jumped to a fresh record high supported by dollar weakness and strong physical activity, a sign that rich investors were pouring money into gold bars and bullion coins.
Spot bullion rose to an intraday record of $1,216.75 a troy ounce, up more that 1.5 per cent.
Gijsbert Groenewegen, managing director of New York-based precious metal hedge fund Silver Arrow Capital, said: “The momentum in gold will only increase.
“We will see $1,300-$1,350 an ounce in early 2010.”
The central bank of China warned about a developing bubble in the gold market, playing down expectations that Beijing would buy bullion to diversify its official reserves away from the US dollar. This echoes a broader sentiment in the gold market following the near 40 per cent rise in prices since January.
Silver rose to $19.34 an ounce, up 1.4 per cent, while palladium set a fresh 16-month high, rising 2.0 per cent to $387.5 an ounce.
Platinum jumped above $1,500 an ounce for the first time since August 2008.
In the energy market, oil prices fell after the US Department of Energy said that crude oil inventories rose sharply last week.
In late afternoon trading, Nymex January West Texas Intermediate fell $1.77 to $76.60 a barrel, while ICE January Brent dropped $1.47 to $77.88 a barrel.
The DoE said crude inventories rose 2.1m barrels, above Wall Street’s forecast for a 0.4m increase.
Among agricultural and soft commodities, white sugar jumped to an all-time high of $629 per tonne on signs of strong physical demand for refined sugar.
Nick Penney, of brokerage Sucden Financial, said the market was anticipating that Pakistan and India would buy white sugar.
India On Wednesday said its sugar production in 2009-10 would be less than 16m tonnes, below market expectations, due to the driest monsoon in 37 years.
