Forget gold’s sell-off, there’s a metals boom emerging, led by copper with other key metals starting to join in.
The surge is part of a run-up in many commodity prices (again, except for gold) led by China’s outperforming economy.
Oil is chipping in, off a low base, with gains of 6% to 8% last week and more than 27% so far this month for both West Texas US crude and Brent, the global marker.
Also underpinning copper (and nickel) is the growing demand from renewables such as solar, electric vehicles, and wind farms.
Agricultural commodities are doing well – well, grains and oilseeds are with China’s strong demand (to help feed the rebuilding on its pig herds after the mass culling to control African swine fever) again the driver, plus drought and poor seasons in Eastern and Southern Europe contributing to the highest corn and wheat prices in four years and soybean prices breaking higher as well.
Wheat prices hit four-year highs in late October and continue to trade just under that level. Corn and soybean prices are buoyant as Chinese buying continues, but sugar, coffee, coca, and cotton are all in the doldrums and could go lower unless there are a significant weather event to disrupt production.
Gold’s weakness continues and Friday’s near holiday trading saw Comex gold futures slump under $US1,800 an ounce, taking the loss for the last three months to $US300 an ounce.
The 2% slide saw the price settle a near five-month low on Friday, as growing optimism about a quick vaccine-fuelled economic recovery and a smooth White House transition powered saw a holidaying Wall Street hit new highs.
A three month low for the US dollar didn’t help gold and it settled down 1.3% at $US1,781.90 per ounce.
It edged higher in after-hours trading to $US1,790, but the outlook is weak and the metal lost 4.2% last week in the worst fall since September 25.
But copper was again the star with the red metal hitting new seven and a half year highs on Friday as speculators joined industrial users in buying metal as they geared up for a recovering economy boosted by COVID-19 vaccines.
Lead, zinc and nickel also moved higher as higher demand from China pushed copper well past $US7,000 a tonne on the LME. It rose to a high of $US7,510.50 a tonne, its highest since May 2013.
In New York, the Comex futures price settled at $US3.40 a pound and closed a litle lower in after hours trading.
Chinese activity data late today for manufacturing and services is expected to show the country’s manufacturing expanded at a slightly faster pace in November, according to economists polled by Reuters.
LME copper was up 3.2% over the week and has risen 72% since the COVID-driven lows of March thanks to the strong demand from China and falling inventories (and production, thanks to COVID-19).
LME lead and nickel both touched one-year highs, with lead surging 3.8% to $US2,111.50 a tonne, the biggest one-day gain in eight months, and nickel rising 1.2% to $US16,460.
Zinc jumped 1.4% to $US2,799 after hitting $US2,809, the strongest since May 2019, aluminium rose 1.1% to $US1,997, and tin rose 0.7% to $US18,950.
Iron ore prices closed within sight of $US130 a tonne for the benchmark 62% Fe fines delivered to northern China.
The Metal Bulletin index price ended at $US129.62 a tonne. While that was up just 79 cents over the week, iron ore has risen by more than 10% so far in November from $US117.69 a tonne on October 30 (and an average of $US120.20 a tonne in October).