Base metals were all winners on Thursday. Copper jumped more than 8 cents to close at $1.7828/lb. Nickel added nearly 8 and one-half cents to finish at $4.5027/lb. Zinc tacked on 3 pennies, ending at $0.5618/lb. Aluminum gained about 3 and two-thirds cents, closing at $0.6490/lb., while lead moved to $0.6010/lb., up 1 and one-third cents from the previous session.

Bloomberg reported that copper rose above $4,000 a metric ton [about $1.81/lb.] for the first time since November in London, gaining with other metals as a Federal Reserve plan to buy assets pulled the dollar lower and fanned speculation about an economic rebound.

“All markets are significantly higher, largely because of the impact of the Fed announcement last night, and the dollar is very weak,” Alex Heath, head of industrial metals trading at RBC Capital Markets in London, said yesterday.

Copper inventories in LME-monitored warehouses fell 0.3% to 493,450 metric tons, extending their decline since Feb. 25 to about 10%. Canceled warrants, or metal earmarked for delivery, fell 825 tons to 22,650 tons and now account for 4.6% of total inventories, down from 12% on March 4.

In technical terms, copper would have to close for two days above $3,840 a ton [about $1.74/lb.] for prices to move to about $4,190 [$1.90/lb.], the next so-called resistance level, Edward Meir, an analyst at MF Global (NYSE:MF) in Darien, Connecticut, wrote in a report.

“However, we would advise caution at these levels and would not be chasing the current bounce,” he wrote. “The market has done too much, too soon, given the still-daunting macro backdrop.”

The metal is unlikely to sustain its rally because the gain is based on expectations that the Fed plan will kick-start the U.S. economy, rather than any actual revival, said Robin Bhar, an analyst at Credit Agricole SA’s Calyon unit in London.

“It may well do, but I think we are talking months, not hours or days,” he said. “We are in completely unknown waters.”

Source: Base Metals Rally