Base Metals Rally Strongly
Aug 22nd, 2008 | By Doug Casey | Category: Financial News, Gold MarketThe base metals were all off to the races on Thursday. Copper started up in the pre-dawn hours and never quit, finishing just off its intraday high at $3.5849/lb., up more than 15½ cents.
Nickel prolonged its recent resurgence, cresting $9 in the pre-dawn hours, then leaving it in the dust as it blasted to a close at $9.5315/lb., up 61 cents. Zinc had an explosive day, just easing from its intraday high at the end at $0.8294/lb. up 5½ cents. Aluminum was solid, adding just under 4 cents to $1.266/lb., while lead shared in the common updraught, tacking on 6 ¾ cents to $0.874/lb.
Copper jumped the most in six months, to a two-week high, as investors fleeing the sinking dollar sought safe haven in commodities.
“The dollar has been overbought as traders were in a state of euphoria,” said Patrick Chidley, an analyst at Barnard Jacobs Mellet in Stamford, Connecticut. “Now that it is back on a path of weakening, it will help copper.”
There was also a boost from the strengthening belief that China will release some pent-up buying demand after the Olympics end and shuttered manufacturing facilities open back up.
A six-month low in Shanghai copper inventories, a decided narrowing in the Shanghai futures price discount to London prices, and a stronger spot premium in the Shanghai futures market are all bullish signs, analysts said.
The industrial metals shared in an overall surge in commodity buying that saw the Reuters/Jefferies CRB Index head for its biggest weekly gain in 33 years. The index rose rising as much as 3.5% yesterday.
And in company news, Xstrata (LON:XTA), the world’s fourth-largest copper producer, abandoned a US$477 million bid for (ASX:IRN) Indophil Resources’ one-third stake in the $3 billion Tampakan copper and gold project in the Philippines.
Xstrata, which sought to add to its 63% stake in the project, yielded to a sweetened bid from rival Stanhill Resources. Tampakan one of Southeast Asia’s largest untapped copper deposits, holds an estimated 2.2 billion tons of mineral resources, including 12.8 million tons of copper and 15.2 million ounces of gold.
Source: Base Metals Rally Strongly
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