Copper Gains to 28-Month High on Fed Plan; Aluminum, Zinc Climb

Nov. 5 （Bloomberg） -- Copper in London jumped to a 28-month high as the U.S. Federal Reserves’ bond-purchasing plan weakened the dollar and boosted the economic outlook. Aluminum and zinc also gained.

The metal for three-month delivery increased as much as 1.9 percent to $8,762.50 a metric ton on the London Metal Exchange, the highest level since July 2008, and traded at $8,749.75 by 10:54 a.m. in Shanghai. The contract is poised for the first weekly gain in three. The December-delivery contract traded on the Comex in New York added 1.8 percent to $3.9810 a pound.

“The Fed decision was even better than expected, which successfully boosted market sentiment,” said Wang Fei, an analyst at Haitong Futures Co. “Copper in London is now targeting the record.” The price reached an all-time high of $8,940 in July 2008.

The Federal Reserve said on Nov. 3 it will buy an additional $600 billion of Treasuries, exceeding Bloomberg News survey’s $500 billion, to reduce unemployment and avert deflation. The program reinforced optimism the world economy won’t deteriorate and at the same time increased the possibility of inflation.

By 2012, the unprecedented stimulus would probably cause inflation excluding food and energy to exceed 2 percent, beyond the Fed’s preferred range, according to seven economists surveyed by Bloomberg News.

The U.S. currency has lost 3.6 percent since Oct. 1 against a basket of six major counterparts on investor bets the Fed’s further monetary easing will debase the greenback. The Dollar Index was little changed at 11:09 a.m. in Shanghai after slipping yesterday to the lowest level since Dec. 8 last year.

‘Higher Markets’

“The loose policy will result in higher commodity markets whether it’s driven by real demand, investor chasing yields, or safe-haven flows,” John DeAngelis, director of metals strategy at Deutsche Bank AG., said at a conference in Ningbo on Nov. 2.

Copper for February delivery on the Shanghai Futures Exchange gained 3.7 percent to 67,110 yuan （$10,075） a ton at 11:12 a.m. local time. Spot copper in Changjiang, Shanghai’s biggest cash market, has been trading mostly at a discount to futures in the past month, suggesting ample near-term supply.

In Chile, workers at Anglo American Plc and Xstrata Plc’s Collahuasi unit plan to start a strike today at the world’s fourth-biggest copper mine after wage negotiations failed. The unit will continue to operate at full capacity using non- unionized employees and contract workers, company spokeswoman Bernardita Fernandez said yesterday.

Aluminum in London gained 1.1 percent to $2,485 a ton, zinc climbed 2.1 percent to $2,564 a ton, and lead increased 1.2 percent to $2,558 a ton. Nickel advanced 1 percent to $24,750 a ton, and tin rose 0.6 percent to $26,669 a ton of 11:13 a.m. in Shanghai.

--Helen Sun. Editors: Richard Dobson, Jake Lloyd-Smith.