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  • Feb 18th, 2005
  • Comments Off on Zinc at 7-1/4-year high, aluminium up
Fund buying and a weaker dollar pushed zinc to fresh 7-1/4-year peaks and aluminium up to six-week highs in active trading on Thursday, helping copper stay within sight of October's near-16-year top, traders said. Three-month zinc closed at $1,361 a tonne, up $33 or 2.1 percent from Wednesday's late kerb close. It peaked earlier to $1,375, a fresh 7-1/4-year high.

Aluminium ended up $33 or 1.7 percent at $1,909 after touching $1,910, the highest since January 4.

"Main buying came from funds and financials. It seems to be endless money flowing into commodities, while consumers are sitting tight and waiting for lower prices," said a trader.

With strong fundamentals in zinc and aluminium, which lagged last year's metals boom, traders said a weaker dollar, making dollar-based commodities more attractive for holders of other currencies, also helped boost fund buying in the two metals.

The dollar slipped on Thursday as earlier gains inspired by strong US jobless claims proved fleeting after comments from the Federal Reserve chief provided no impetus to buy the currency.

Fed chairman Alan Greenspan, in a second day of congressional testimony, reiterated that US interest rates remain "fairly low," in a signal that they will keep rising.

Those dealers looking for more dollar-positive comments might have been disappointed.

The dollar traded lower at $1.3071, down 0.3 percent from late Wednesday's levels. The dollar hit three-month highs against the euro last week. "Gains in aluminium and zinc were on the basis of very strong fundamentals and the weaker dollar," Standard Bank's Tony Yu said. "The US data today was uninspiring."

In a recent Reuters poll of metals analysts, zinc and aluminium were seen with the greatest upside potential.

Copper was up $50 at $3,157, after trading near to October's near-16-year high of $3,175.

But there was a growing feeling that copper might have peaked and bearish sentiment could re-assert itself before the market successfully challenged $3,175 resistance and 1989's all-time high of $3,280.

Lead rose $17 to $923 and tin was untraded, indicated at $7,950/7,970 versus $7,825. Nickel fell $150 to $15,250.

Copyright Reuters, 2005


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