Farallon Resources Ltd. (fka FRLIF)

[the cork]

Zinc gains, Copper Climbs in New York as Weakening Dollar Stokes Demand From Investors
By Nicholas Larkin and Glenys Sim - Sep 22, 2010 5:14 AM PT

Copper gained for the first time in three days in New York as a weaker dollar bolstered the appeal of commodities as alternative investments.

The dollar slid to an almost five-month low against the euro after the Federal Reserve yesterday left its benchmark interest-rate target at a record low and pledged to take more steps to spur economic growth if needed. The euro gained as Portugal sold bonds today after investors bought the maximum amounts offered at Spanish and Irish debt sales yesterday.

“The main thing is the weakness of the dollar,” said Dan Smith, an analyst at Standard Chartered Plc in London. “The Fed statement creates additional worries about the U.S., and the European bond sales create positives for Europe.”

Copper for delivery in December added 2.35 cents, or 0.7 percent, to $3.5045 a pound at 7:54 a.m. on the Comex in New York. Copper for delivery in three months was 0.4 percent higher at $7,710 a metric ton on the London Metal Exchange.

Investors bought and sold 3,419 LME copper contracts, about 8 percent of volume on Sept. 17. Financial markets in China, the world’s biggest copper user, are closed until Sept. 27 for a holiday.

The dollar slumped 1.5 percent against the euro after the Fed statement yesterday and today fell to the lowest level since April 27. Some investors buy commodities as an alternative to a weaker greenback, which makes dollar-priced metals cheaper in terms of other monies.

‘Optimistic About Demand’

“Near-term direction will be influenced by economic data, the stock market and the dollar,” Tiger Shi, head of Asia- Pacific metals at Newedge Group, said from Hong Kong. “We are still pretty optimistic about demand going forward.”

The Federal Housing Finance Agency’s monthly index for U.S. house prices, due out today at 10 a.m. New York time, fell 0.2 percent in July, according to a Bloomberg survey of economists. That would be less than June’s 0.3 percent drop.

Builders in the U.S. began work on more homes than forecast in August, outpacing the number of building permits issued, figures showed yesterday. Construction accounts for a quarter of copper demand, according to the Copper Development Association. Asian shares rose today.

Futures on the Chicago Mercantile Exchange show a 21.2 percent chance the U.S. central bank will lower its target rate for overnight bank lending from between zero and 0.25 percent to zero at its June 2011 meeting, up from 18 percent odds a week ago. The U.S. central bank also said yesterday it refrained from expanding its holdings of securities.

Fed Statement

The Fed said it “will provide additional accommodation if needed” to spur growth and that inflation “is likely to remain subdued for some time.” Investors often buy commodities as a hedge against rising prices.

Portugal sold 750 million euros ($1 billion) of bonds after Ireland sold 1.5 billion euros of debt yesterday and Spain sold 7 billion euros of 12-month and 18-month bills, the maximum target.

LME copper stockpiles gained for the first time in six days, rising 0.5 percent to 382,100 tons and rebounding from the lowest level since November, daily exchange figures showed. Orders to draw copper from inventories, or canceled warrants, fell 1.6 percent to 28,700 tons.

One party held between 30 percent and 39 percent of the stockpiled metal and another held between 40 percent and 49 percent as of Sept. 20.

Tin, Aluminum

Among other LME-traded metals for three-month delivery, tin rose 0.7 percent to $23,150 a ton. The metal is this year’s best LME performer, adding 37 percent, compared with the 20 percent advance by closest rival nickel. Prices have been bolstered by disruptions to production in the Democratic Republic of Congo and Indonesia, the world’s biggest tin exporter.

Indonesia’s August tin exports fell to 7,974 tons from 8,870 tons in July, the Ministry of Trade said today.

Aluminum added 0.4 percent to $2,184 a ton, and zinc gained 0.4 percent to $2,150 a ton. Nickel declined 0.6 percent to $22,215 a ton, and lead was 0.3 percent higher at $2,182 a ton.

Commodity assets under management declined $7 billion to $293 billion in August, Barclays Capital said in a report. The drop was the second-biggest this year, after an $11 billion retreat in January, the bank said. The figures cover commodity index swaps, exchange-traded products and medium-term notes.

http://www.bloomberg.com/news/2010-09-22/copper-climbs-for-first-day-in-three-as-dollar-weakens-on-federal-reserve.html