Copper prices up on demand, optimism

Copper prices were higher Tuesday on higher demand after the US dollar weakened and demand jumped, and after Goldman Sachs predicted that three-month contracts for copper will sell for more next year than previously estimated.

Goldman Sachs said that in light of indications that the economy is recovering, copper will sell for around $7,650 per tonne by the end of 2010, higher than the $5,800 per tonne forecast earlier, and also said that copper supply will miss demand by 88,000 tonnes next year.

December copper was up 9 cents to $2.96 per pound in New York trade, while three-month contracts in London were up $196 to $6,520 per tonne during the session.

Goldman Sachs also said that other base metals prices will be higher than expected next year, with the exception of zinc, which it said will sell for $2,170 per tonne by the end of next year, lower than its earlier forecast of $2,600 per tonne, due to an overabundance of supplies in China.

Precious metals prices were also higher, with gold following oil higher and other precious metals following gold as the US dollar weakened and investors became more confident that the economy will recover soon.

December gold added $2.80 to $999.50 per troy ounce, while December silver was up 24 cents to $16.52 per troy ounce, October platinum was $30.50 higher to $1,289.60 per troy ounce, and in mid-morning trade December palladium had added $3 to $299 per troy ounce after going as high as $301 per troy ounce earlier in the session.

Platinum and palladium, both of which are used in the manufacture of pollution-control devices for cars and trucks, were helped by better data on automobile sales in the US.