Copper futures jumped $2 on Friday as the dollar was weak and prompted investments into commodities to compensate for inflation.
Today the U.S. Dollar Index fell 0.6 percent and the currency dropped 6.3 percent against six major currencies as General Electric Corp. showed losses on its earnings. The company is seen as an indicator of the health of the economy in the United States.
Yesterday dollar fell to a record of $1.5913 against the euro. Despite of the continuous declines of the dollar, experts doubt a new agreement to help the U.S. currency will result from the meeting of the Group of Seven finance ministers and chiefs in Washington.
As the dollar declines, commodities denominated in this currency become cheaper for people purchasing with foreign currencies. So far $70 billion has been poured into commodity markets this year from hedge funds and other investors, said Citigroup Inc. this week according to Bloomberg.
Copper futures rose 2.05 cents or 0.52 percent to $3.9445 a pound on the Comex division of the New York Mercantile Exchange. Prices surged as high as $4.039 on Thursday which was the closest level to the record of $4.04 a pound in May 2006.
In addition, supply-demand issues are affecting prices today. Speculations that demand may increase came after stockpiles of copper in the London Metal Exchange fell 950 tonnes to 115,150 tonnes on Friday, standing at their lowest level since July 2007 and the equivalent to two and a half days of global consumption.
We see another big deficit in Q2, inventories returning to all-time lows and prices testing all-time highs again, said Barclays Capital in a research note.
Copper futures in the London metal Exchange fell $103 or 1.16 percent to $8,761 a metric ton on Friday.