Base metals across the board on the London Metals Exchange made a comeback midway through Thursday's session, rebounding from their lows on bargain-hunting and a sharply weaker dollar, said traders and analysts.
Base metals on the LME have recouped losses seen earlier Thursday driven by weakness in the dollar, said Jon Bergtheil of JP Morgan.
However, late Thursday, the dollar extended its weakness, helping to push base metals prices even higher.
The sharp drop in the dollar was prompted by a Reuters report citing Governor Zhou Xiaochuan as saying that China has a plan to diversify its foreign exchange reserves and is considering various ways of doing so, prompting the dollar to extend losses against the euro and also start to lose ground against the yen.
Meanwhile, LME three-month copper prices surged to trade at $7,325 a metric ton, off Thursday's low of $7,115/ton, while three-month aluminium surged to $2,827.50/ton, up from Thursday's low of $2,712.50/ton.
However, before the sharp drop in the dollar, base metals prices were climbing steadily on bargain hunting, said analysts.
Base metals at the LME climbed steadily midway through Thursday, with zinc hitting new highs on bargain hunting, said Robin Bhar of UBS, as the fundamental supply and demand picture is still intact.
LME three-month zinc hit a new all-time high of $4,545/ton before modestly retreating while sister-metal lead also rose on bargain-hunting to trade at $1,730/ton.
Earlier Thursday, base metals across the board were under heavy pressure due to profit-taking from speculative longs, said a LME broker.
3 months metal (prices in dollars a ton)
Bid – Ask, Change from Wednesday PM kerb
Copper 7325.00-7330.00 Up 205.00
Lead 1740.00-1745.00 Up 23.00
Zinc 4510.00-4515.00 Up 90.00
Aluminium 2830.00-2832.00 Up 113.00
Nickel 30305.00-30310.00 Up 255.00
Tin 10000.00-10025.00 Up 200.00
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