Copper futures on the London Metal Exchange (LME) rose 1.6 percent to an all-time high of $3,308 a tonne on Thursday on fund buying and a weaker dollar, but closed off the day's high on profit-taking, traders said. After reaching the new top briefly, three-month copper closed at $3,290, up $35 from Wednesday's close. The previous record high was $3,305 on March 16. "It's fund buying," Standard Bank analyst Robin Bhar said, noting this was the end of the first quarter.
"It's been supposedly buying in order to keep valuations up to get their performance figures even better."
"Maybe this will see some selling coming through tomorrow and next week with the start of the new quarter. But (it's) difficult to say because this fund buying - there is no timing to it at all," he said.
He said a firmer tone in Shanghai copper futures and a weaker dollar also helped boost LME copper prices.
Copper is up 14 percent since the start of 2005 as investors bet on strong demand and tight supply, buying into metals on the back of a weak dollar. A soft dollar makes metals denominated in the currency cheaper for overseas investors.
A heavy fund sell-off on January 4, at the start of the first quarter, wiped some 7.5 percent off copper from near its 16-year peak of $3,175 and nearly eight percent off aluminium from around $1,960.
Nearby tightness remained acute, with the cash/threes spread was holding at a firm $163 premium. Currently LME stocks stand at 44,775 tonnes, close to historically low levels.
Thursday's sharp gains in LME copper came after front-month Shanghai copper futures hit record highs earlier on Thursday due to a tight physical market after a 41 percent drop in Shanghai warehouse inventories.
China's voracious appetite for raw materials is the major driver behind the market.
Analyst William Adams of BaseMetals.com said in a daily report that the pick-up in prices when the dollar was relatively strong was a bullish signal.
"Given the current situation with increased interest in commodities by a wider range of funds, the general low level of stocks and the backwardations, it is difficult to argue against being bullish," he said.
By 1619 GMT the euro had gained a third of one percent to trade at $1.2973, having hit a six-week low of $1.2853 on Monday.
Traders were awaiting US non-farm payrolls data on Friday, expected to show that 220,000 new jobs were created in March, compared with 262,000 in February.
The sharp gains in copper helped boost other metals, with aluminium gaining $20 to $1,973.
Zinc rose $13 to $1,375, lead was up $35 at $990 and tin bounced $225 to $8,125.
Nickel rose $300 to $15,900, with cash/threes widened to $400/440 backwardation from around $350/360 on Wednesday.
In the mining sector, Xstrata and Antofagasta gained 2.9 percent and 1.8 percent respectively as copper hit a new record peak in Shanghai. Europe's largest copper producer also forecast strong demand.