Farallon Resources Ltd. (fka FRLIF)

[the cork]

Zinc adds, Copper Rises for Second Day as Dollar Drops Before Federal Reserve Meeting
By Maria Kolesnikova - Nov 2, 2010 5:03 AM PT

Copper rose for a second day in London as the dollar weakened before a Federal Reserve meeting that may result in further asset purchases to sustain a recovery in the world’s largest economy.

The U.S. Dollar Index, a six-currency gauge of the greenback’s strength, slid as much as 0.6 percent. Copper gained as much as 0.9 percent and fell as much as 0.2 percent as investors bought and sold 4,498 futures contracts, about 8 percent of volume for the entire Oct. 29 session. Also today, the U.S. holds midterm elections.

“Copper and the other base metals are range-trading ahead of the U.S. elections” and the Fed meeting, said Leon Westgate, an analyst at Standard Bank Plc in London. “Turnover has been very light, with the metals back in dollar-watching mode.”

Copper for delivery in three months climbed $61, or 0.7 percent, to $8,361 a metric ton at 11:49 a.m. on the London Metal Exchange. Copper for delivery in December added 0.5 percent to $3.8055 a pound on the Comex in New York. All of the six main metals traded on the LME gained, led by aluminum.

A slumping dollar makes metals priced in the currency cheaper in terms of other monies and spurs demand for raw materials as an alternative investment. The dollar index dropped for a second month in October as LME copper gained for a fourth month.

$500 Billion

Fed policy makers begin a two-day meeting today. The central bank is likely to start a fresh round of unorthodox stimulus tomorrow by announcing a plan to purchase at least $500 billion of long-term securities, according to economists surveyed by Bloomberg News.

In the U.S. elections, the Republicans are poised to retake the House of Representatives and narrow Democrats’ margin in the Senate, delivering a rebuke to President Barack Obama’s party in a campaign shaped by voter anxiety over jobs and the economy.

The copper market is in a “perfect storm” for bulls, and prices may reach new highs next year, John DeAngelis, director of metals strategy at Deutsche Bank AG, said at a conference today in the Chinese city of Ningbo. LME copper rose last month to a 27-month high.

The world financial crisis delayed development of mines, said Carlos Risopatron, head of environment and economics at the International Copper Study Group. World capacity to produce copper concentrate, the raw material for making refined metal, will expand by less than 2.5 million tons between 2010 and 2013 amid financing difficulties, according to the ICSG.

Copper Demand

“Better-than-expected manufacturing data emerging from the U.S., China and the U.K. yesterday has improved confidence that demand for copper will be sustained through the first quarter of next year,” analysts at Fairfax IS said today in a report.

Factory output in the U.S. expanded at the fastest pace in five months, while manufacturing in China grew at the fastest pace in six months in October, data yesterday showed. China and the U.S. are the world’s two biggest copper users. In the U.K., manufacturing growth unexpectedly accelerated in October and hiring improved as export orders increased.

Tin for three-month delivery on the LME rose 0.8 percent to $25,800 a ton. Prices reached a record $27,338.50 on Oct. 14. The metal has jumped 52 percent this year, leading advances on the exchange, after production was disrupted in Indonesia and the Democratic Republic of the Congo.

Aluminum rose 1.6 percent to $2,410 a ton and nickel climbed 1.2 percent to $23,530 a ton. Lead gained 0.7 percent to $2,482 a ton and zinc added 0.2 percent to $2,455 a ton.

http://www.bloomberg.com/news/2010-11-02/copper-rises-for-second-day-as-dollar-drops-before-federal-reserve-meeting.html