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Copper Reverses Rally to 14-Month High as Dollar Stems Decline

By Glenys Sim

Dec. 2 (Bloomberg) -- Copper dropped for the first time in four days in Asia, reversing a rally to the highest level in more than 14 months, as some investors sold the metal to lock in gains and as the dollar’s decline paused.

The metal used in construction and automobiles rose to $7,101 a metric ton, the highest price since Sept. 23, 2008, as the dollar traded near a 16-month low against the euro.

“With the strong rally we’ve been seeing, there’s bound to be some profit taking,” Li Jingyuan, an analyst at Haifu Futures Co., said today from Shanghai.

Copper for delivery in three months on the London Metal Exchange traded little changed at $7,070 at 3:03 p.m. in Singapore, after falling by as much as 0.7 percent earlier.

The March-delivery contract on the Comex division of the New York Mercantile Exchange slid 0.2 percent to $3.2245 a pound. Earlier the contract climbed as much as 0.4 percent to $3.2450 a pound the highest price for a most-active contract since Sept. 23, 2008.

March-delivery copper on the Shanghai Futures Exchange gained as much as 1.6 percent to 55,850 yuan ($8,181) a ton, the highest level since Sept. 8 2008, before ending the day up 1.2 percent at 55,630 yuan.

“The general trend is still for higher prices, and this will continue to be supported by a weaker dollar,” said Li.

Copper has more than doubled this year while the Dollar Index, which tracks the greenback’s performance against six major currencies, has declined 8.4 percent as investors bought raw materials as an alternative to a declining U.S. currency. Commodity funds pulled in more than $1 billion in investments for a second straight week, pushing inflows for the year to $14.6 billion, according to EPFR Global.

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=ad_5YsxrcxYA