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Commodities

Commodities soar on expectations of continued US easing

TOKYO -- Commodities are regaining their appeal worldwide, with prices of nonferrous and precious metals rising. Helping drive the trend is growing investor confidence on the back of expectations of continued monetary easing in the U.S. and receding pessimism over slowdowns in emerging economies.

     Transactions targeting nonferrous metals are growing especially briskly due to their versatility. At the benchmark London Metal Exchange, copper is trading at nearly $7,200 per ton, up 13% from mid-March.

     The metal is used in many industrial products, including power grids, home wiring, air conditioners and automotive wiring harness components. In China, which is responsible for about 40% of global copper consumption, the manufacturing Purchasing Managers Index is moving upward.

     Prices of aluminum, used in beverage cans and for home construction, are at their highest level in about a year, supported by strong sales of used homes in the U.S. Zinc, a material used in automotive plated steel sheet, has hit the $2,270 level per ton for the first time in about two years and 11 months, supported by robust automotive sales in the U.S. and China.

     Futures prices of palladium, used in automotive catalytic converters, are at their highest level in 13 years and four months on the benchmark New York Mercantile Exchange.

     Helping drive these price increases is growing investor confidence. Pessimism over economic slowdowns in China and other emerging countries has receded and given way to growing expectations that the U.S. Federal Reserve may prolong its monetary easing program.

     These expectations are also fueling more speculative investment. Net purchases of gold by funds on the New York futures market are up 80% since mid-June. The material has been trading at around $1,320 per troy ounce, up 6% from the recent low marked in early June.

(Nikkei)

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