Copper Leads Commodities Rebound on Speculation Rally Not Over
2006-05-23 10:14 (New York)
By Katy Watson and Chanyaporn Chanjaroen
May 23 (Bloomberg) -- Commodities rebounded, led by copper
and silver, on speculation a rally that drove prices to records
isn't over as demand for some raw materials exceeds production.
Copper climbed 6 percent, its largest increase since May
11, silver rose the most in two weeks and gold gained for the
first session in five. Oil topped $70 a barrel for a first
session in four. Commodities posted their biggest declines in 25
years last week as some investors bet prices were exaggerated.
``The underlying fundamentals of supply and demand around
the world remain the same,'' Charles ``Chip'' Goodyear, chief
executive officer of BHP Billiton, the world's largest mining
company, said in a teleconference today. ``We are seeing very
good economic conditions around the world, the supply side is
still struggling to keep up.''
Copper for delivery in three months jumped as much as $615
to $8,195 a metric ton on the London Metal Exchange. Earlier it
fell as much as 2.3 percent to $7,405. Silver for immediate
delivery gained as much as 55 cents, or 4.4 percent, to $13.07
an ounce, recording the biggest daily gain since May 9.
Crude oil soared $1.76, or 2.5 percent, to $70.99 a barrel,
a level last seen May 17. The Reuters/Jefferies CRB Futures
Price Index of 19 commodities, including base and precious
metals, rose 2.07, or 0.6 percent, to 346.28. The index declined
to a one-month low of 337.54 on May 19.
Commodities declined last week as speculative investors cut
their holdings on concern global interest rates will increase,
curbing demand. Copper dropped as much as 9 percent on May 15,
its biggest one-day decline since October 2004. Gold fell 8.3
percent last week.
Declining Dollar
Speculation the dollar may extend declines against the euro
and yen boosted precious metals as an alternative investment
today.
``People are looking for opportunities to exit the dollar
into something safer,'' said James Turk, founder of
GoldMoney.com. ``Commodities are benefiting as a general rule,
and I think gold and silver moved up in part because people are
exiting the dollar.''
Shares of mining companies rallied. BHP Billiton surged as
much as 8.3 percent, the largest daily increase since March
2001. Anglo American Plc, the world's No. 2 miner, soared 8.3
percent, the biggest since March 2003.
Price swings in commodities including copper will continue
because of buying and selling from speculators, said Peter
Hollands, managing director of U.K. consulting company
Bloomsbury Minerals Economics Ltd.
``Conditions like this will probably prevail for another
year,'' Hollands said.
--With reporting by Chanyaporn Chanjaroen in London and Paul
Waide in Melbourne. Editor: Casey (dje/jwc). |
