Copper prices gained the most in a week as a weaker dollar boosted demand for the commodity as a currency hedge and auto sales surged in China.
The U.S. Dollar Index, a six-currency gauge of the greenback's value, fell as much as 1.6 percent. Copper has climbed 28 percent from the end of March as the dollar slumped 6.6 percent. Some traders buy commodities to preserve purchasing power when the U.S. currency slips. May vehicle sales rose 34 percent in China from a year earlier, an industry group said.
"We will see copper prices continue to rise on the dollar weakness story," said Michael Pento, the chief economist at Delta Global Advisors Inc. in Holmdel, New Jersey. "The decline in the dollar will help all of the commodities."
Copper futures for July delivery rose 11.25 cents, or 5 percent, to $2.3655 a pound on the New York Mercantile Exchange's Comex division. That marks the biggest gain for a most-active contract since June 1. The price has surged 68 percent this year.
The metal may reach $2.75 a pound by the end of the year as inflation accelerates, said Pento, who in January correctly predicted copper's 2009 rally.
Copper prices also were supported by a report today that showed auto sales jumped in China, the largest user of the metal.
Chinese vehicle purchases reached 1.12 million units in May, the China Association of Automobile Manufacturers said today. Copper, aluminum and lead are used in cars, parts and batteries.
China's Influence
"Copper's gains recently reflected the market view on China," while "much depends on the dollar," Leon Westgate, a Standard Bank Plc analyst in London, said today by telephone.
On the London Metal Exchange, copper for delivery in three months jumped $190, or 3.8 percent, to $5,170 a metric ton ($2.35 a pound).
Among other LME metals, aluminum rose 2.7 percent to $1,663 a ton. Nickel added 4.9 percent to $15,000 a ton and tin jumped 5.9 percent to $15,775 a ton. Zinc climbed 3.9 percent to $1,605 a ton.
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Copper Prices Rise as Dollar Slumps, Auto Sales So
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Posted - 06/10/2009 : 03:45:47
