Metals shine on China, weak dollar

The prices of industrial and precious metals forged higher this week, aided by Chinese demand hopes, rebounding oil and the weakening dollar.

Aluminium surged on Friday to a seven-month high at $1,655 per tonne — not seen since last September.

Nickel soared to five-month peak at $9,585 per tonne, and zinc hit $1,958 per tonne — scoring its best level in eight months.

Copper, lead and tin had rallied on Thursday to one-month pinnacles.

“China is turning the corner and … economic data supports that,” said William Adams, head of commodity research at metals research group Fastmarkets.

Sentiment brightened as a string of upbeat data from China and rising oil prices fuelled hopes for the global economy and commodity demand.

China’s economy meanwhile grew 1.1 percent in the first quarter of this year compared with the previous three months. That, however, marked a slowdown from 1.5-percent expansion in the last quarter of 2015.

Adams added that metals demand could also be powered higher by restocking.

“The big question is whether consumers then come in to restock — and whether equity and bond markets start to correct as well,” he told AFP.

“A restocking cycle in the commodity markets can be a very powerful phenomenon.”

Precious metals soared this week on the struggling US currency.

The dollar flagged as poor US economic data reinforced the view that the Federal Reserve will remain cautious about raising interest rates.

The US central bank had implemented its first hike in almost a decade back in December, signalling the start of a rate-tightening cycle.

“Precious metals are surging across the board, with silver and now platinum looking particularly bullish,” added City Index analyst Fawad Razaqzada.

“The pressure has been building for precious metals like silver to explode higher in recent months.

“The significantly weaker dollar has helped to underpin several buck-denominated commodities of late.

“The US currency has depreciated because of receding expectations about the pace of interest rate rises.”

A struggling greenback makes dollar-denominated commodities cheaper for buyers using stronger currencies.

That tends to stimulate demand and send prices higher.

Gold rose Thursday to a five-week high at $1,270.47 per ounce, helping to push sister metal silver to an 11-month peak at $17.69.

Platinum and palladium scaled their way to multi-month heights.

Razaqzada added that “extremely loose central bank policy across the globe has boosted the appeal of precious metals since they are all non-interest-bearing assets”.

The European Central Bank opted Thursday to maintain its loose monetary policy but pledged more easing to stimulate growth if needed.

At the same time, fading Chinese demand concerns have also been “helpful” for silver prices, according to Razaqzada.

“Chinese demand fears have receded in recent times owing to an improvement in data there,” he said.

“This has been especially helpful for silver, which, as well as being a precious metal, has many industrial uses.”

By Friday on the London Bullion Market, the price of gold rose to $1,243.25 an ounce from $1,227.10 a week earlier.

Silver advanced to $17.19 an ounce from $16.17.

On the London Platinum and Palladium Market, platinum increased to $1,028 an ounce from $986.

Palladium grew to $611 an ounce from $568.

On the London Metal Exchange, copper for delivery in three months rose to $5,050 a tonne from $4,806.50 a week earlier.

Three-month aluminium increased to $1,655 a tonne from $1,550.50.

Three-month lead advanced to $1,794 a tonne from $1,726.

Three-month tin climbed to $17,365 a tonne from $17,222.

Three-month nickel gained to $9,265 a tonne from $8,935.

Three-month zinc increased to $1,931 a tonne from $1,876.50.