Copper Climbs to a 27-Month High in London as Dollar's Skid Boosts Demand

Copper rose to a 27-month high in London as the dollar declined, boosting demand for metals as alternative investments.

The greenback dropped to the lowest level in 10 months against a basket of six major currencies on bets that the Federal Reserve will increase debt purchases to sustain economic recovery. Copper has gained 33 percent since July 1 as the dollar slumped and inventories shrank.

“It’s all about the dollar,” said Lannie Cohen, the president of Capitol Commodity Services Inc. in Indianapolis. “As long as the dollar goes down, copper prices will go higher.”

Copper for delivery in three months rose $38, or 0.5 percent, to $8,400 a metric ton （$3.81 a pound） on the London Metal Exchange. Earlier, the price reached $8,490, the highest level for a most-active contract since July 8, 2008.

“As renewed quantitative easing by the Fed appears increasingly likely, this is impacting directly upon currency markets, and metals are reacting in line with this,” said Nic Brown, an analyst at Natixis in London.

On Oct. 4, Fed Chairman Ben S. Bernanke said that the central bank’s first round of large-scale asset purchases aided the economy and that further buying is likely to help more. He is scheduled to speak about monetary policy in Boston tomorrow.

Some traders buy commodities as the dollar weakens to hedge against inflation. The Reuters/Jefferies CRB Index of 19 raw materials rose to the highest level in two years today.

In New York, copper futures for delivery in December slipped 0.5 cent, or 0.1 percent, to settle at $3.8155 a pound on the Comex. Earlier, the price reached $3.8675, the highest level since July 7, 2008.

“We’re due for a correction, but as long as the dollar goes down, the correction will be shallow,” Cohen of Capitol Commodity Services said. Prices may reach $3.95 in a few weeks, he said.

Also on the LME, tin and zinc gained, while lead, nickel and aluminum prices dropped.