It was a banner day today for the base metals as copper, zinc, nickel, aluminum, and lead all rose. Copper rose slightly in early trading before falling to an intraday low at around 9am. Prices rallied, however, to finish at $3.7692/lb., up ¾ cents.

Zinc also traded up in the pre-dawn hours before falling to under $0.81/lb. A late rally salvaged the day as the metal surged up 3 ½ cents, 4.3%, to $0.8584/lb. Nickel tracked the movements of copper and zinc, riding a late rally to close at $8.3983/lb., up 14 ¾ cents. Aluminum rose steadily throughout the day, finishing up almost 2 cents, at $1.3453/lb. Lead also had a great day, breaking through $1 barrier once again to end at $1.0183/lb., up 4 ½ cents.

The main impetus for the rise in the base metals was the combination of dollar’s weakness coupled with rising oil prices. These factors served to make the base metals, and commodities in general, an attractive hedge against inflation for investors.

Lead’s gain, its largest in two weeks, was fueled by news that China, the biggest producer and consumer of the metal, will increase imports.

According to Jim Lennon and Adam Rowley of Macquarie Group Ltd. (ASX:MQG), “domestic lead demand [in China] has remained strong in 2008.” They continued that “a large increase in LME-canceled warrants in Singapore was reportedly due to market participants looking to move metal from the LME (CVE:LME) to China, selling the material for a profit.”

Despite the overwhelmingly good news on the day, there was some cause for concern for copper. A report by the U.S. Commodity Futures Trading Commission showed that hedge funds and large speculators cut net-long positions on the metal by 67%, only a week removed from a 54% decline.

“The funds are pulling out of copper and the other metals because of this picture of slowing demand and growth,” remarked Ron Goodis of Equidex Brokerage Group.

Source: Base Metals All Up