Copper led metals higher on Monday on expectations of improving appetite from top consumer China and higher demand from the US market as the dollar pared recent gains. Benchmark copper on the London Metals Exchange closed at $5,559 a tonne, up 2.5 percent. Last week, the metal used in construction and power recorded its first weekly fall in three when it dropped 2.3 percent.
Chinese investors, whose rush into copper hauled it to 17-month highs this month, say infrastructure spending and government reforms will keep the metal well supported for the rest of this year and into 2017. A recent rise in metals has also been tied to expectations of higher demand from the United States after Donald Trump's surprise win in the presidential election. Trump has vowed to ramp up infrastructure spending.
"The rise today is a combination of factors with a weaker dollar and a second thought on expenditure plans by the US government, which is well positioned to profit from it," said Commerzbank head of commodities research Eugene Weinberg. "But the market is overzealous and is overestimating the impact of these measures." Some analysts have poured cold water on the Trump-related rally, saying any increase in US building spend would be marginal while others emphasise that any uptick in demand was positive. "While we don't expect detailed plans until well into the new presidency, in the short-term we think the positive momentum(for metals) will continue," Macquarie said in a note.
The dollar index fell 0.2 percent against a basket of major currencies after hitting its highest levels in almost 14 years on Friday. A weaker dollar boosts the buying power of those paying for commodities with other currencies. Investors raised their net-long position in COMEX copper futures and options in the week to November 15 to a record for the second straight week, US Commodity Futures Trading Commission data showed on Friday. Elsewhere on the LME, nickel jumped the most in two weeks, up 5 percent to $11,400 per tonne while zinc rose 1.7 percent to $2,581 a tonne. Lead and aluminium both gained 1.6 percent to $2,173 and $1,722 respectively. Tin added 3.2 percent to $20,850 per tonne.
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