Copper traders are the most bullish in almost 11 months on mounting speculation central banks will do more to bolster growth, strengthening demand for metals.
Twenty-one analysts surveyed by Bloomberg said they expect prices to gain next week and five were bearish. A further four were neutral, making the proportion of bulls the highest since Oct. 14. Hedge funds are betting on higher prices for the first time since May and stockpiles in warehouses monitored by the London Metal Exchange, the largest metals bourse, dropped to the lowest level in almost four years.
Commodities, which entered a bull market last month, may rise another 10 percent, Jeffrey Currie, the head of commodities research at Goldman Sachs Group Inc., said in an interview. The European Central Bank yesterday held interest rates at a record low and President Mario Draghi said policy makers agreed to an unlimited bond-purchase program. Federal Reserve Chairman Ben S. Bernanke pledged in an Aug. 31 speech to promote growth with “additional policy accommodation as needed.”
“It’s really expectations of what the next round of initiatives will do for global growth,” said Carole Ferguson, an analyst at Fairfax IS in London. “It’s a good indicator of industrial activity. If there’s any recovery in demand, copper should go up quite a lot.”
Copper rose 3.7 percent to $7,881.50 a metric ton this year on the LME after a 21 percent slump last year. Prices tripled as the Fed bought $2.3 trillion of debt in two rounds of quantitative easing from December 2008 through June 2011. The MSCI All-Country World Index of equities gained 9.9 percent since the start of January and the Standard & Poor’s GSCI gauge of 24 commodities added 4.4 percent. Treasuries returned 2.1 percent, a Bank of America Corp. index shows.
Speculators held a net-long position of 3,260 futures and options as of Aug. 28, U.S. Commodity Futures Trading Commission data show. They had wagered on price declines for the previous 14 weeks. Inventories tracked by the LME plunged 42 percent this year, sliding to 213,225 tons yesterday, the lowest since October 2008. They were at 215,950 tons today, bourse data show.
Prices will advance to $9,000 by the end of this year, Goldman’s Currie said in a Bloomberg Television interview from Singapore yesterday. The bank told investors to increase commodities holdings in June and a month later forecast a 27 percent gain in 12 months.