Sun, Sep 03, 2017 - Page 14 News List

Last month saw metals aluminum to zinc rise

Bloomberg

Copper rods are pictured at Truong Phu cable factory in Vietnam’s Hai Duong Province on Aug. 11.

Photo: Reuters

If you thought metals were only rallying on US dollar weakness, think again.

Gold last month posted its best month since January as US political turmoil helped boost demand for precious metals as havens.

Zinc’s monthly gain was the biggest in more than two years and copper had its best August since 2009, pushed by bets on tighter supplies and Chinese demand.

Base metals are gaining as improving economic data and low borrowing costs stoke demand, even as the US dollar heads for its first monthly gain in six.

Signs of tame US inflation have reduced odds the US Federal Reserve will tighten monetary policy this year.

The US central bank might not be able to do “much more than one hike” for next year, Pictet Wealth Management currency strategist Luc Luyet said.

“Even if the data looks good, the market is starting to believe the Fed does not have a hawkish view,” Frank Cholly, a senior market strategist at RJO Futures in Chicago, said in a telephone interview. “They can’t justify rate hikes with such low inflation.”

A gauge of the US dollar was little changed last month after five straight monthly losses.

An index of the main metals traded in London posted an eighth straight weekly gain, the longest run since May 2006.

The BI Global Senior Gold Valuation Peers gauge has advanced 9.2 percent, the most since January.

Gold futures this week closed above US$1,300 per ounce for the first time since November last year as conflict looms over North Korea’s nuclear ambitions, which has also hurt stocks and buoyed US Treasuries.

Bullion should trade above that level next year as the US dollar weakens and the Fed sticks to just two rate hikes, in December and then March next year, Luyet said.

Gold futures for December delivery on Friday settled at $1,330.4 per ounce on the Comex in New York, up 2.6 percent from last week’s US$1,296.50.

“The missile firing was a contributing factor” in gold’s advance, Bart Melek, head of global commodity strategy at TD Securities in Toronto, said by telephone.

Adding to the tailwinds for gold has been “the risk-off environment, combined with a significant portion of the investing public thinking the Fed will not deliver,” he said.

Three-month copper on Thursday rallied 0.3 percent to settle at US$6,788 per tonne on the London Metal Exchange, near the highest close since 2014. That locked in monthly gains of 6.6 percent.

Spot copper on Friday settled at US$6,775 per tonne, up 1 percent from last week’s US$6,713.50.

Nickel rallied 16 percent last month, aluminum climbed 10 percent and zinc added 13 percent.

For the week, nickel rose 3.4 percent, aluminum added 0.8 percent and zinc gained 1 percent.

The six-metal LMEX Index on Thursday closed at the highest since September 2014.

Industrial metals have rallied this year amid burgeoning optimism about consumption in China, as well as the impact of supply-side reforms, especially for aluminum.

Stronger-than-expected US GDP and employment figures are also lending support.

“The economic figures from the US, China and EU are all improving,” Richard Fu, head of Asia-Pacific sales at Amalgamated Metals Trading Ltd, said by e-mail.

Short-term technical traders are also being drawn into the rally as prices break new highs, while bearish funds are also buying to stop out of their positions, he said.

The gains have spurred banks to raise their outlooks.

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