Copper notched its biggest weekly gain in four months on Friday, ending firm despite below-forecast U.S. employment data that failed to deter demand for the metal as a hedge against inflation.
"It's holding up because people want the physicals ... they are looking for a new store of value," said Zachary Oxman, managing director with TrendMax Futures in Encinitas, California.
"Inflation seems to be taking over and it is moving everything up. Nothing wants to lead that charge more than metals and commodities," he said.
For the week, the Reuters-Jefferies CRB index rose nearly five per cent for its biggest weekly gain since October 2009.
London Metal Exchange (LME) benchmark copper was untraded at the close, but last quoted at $8,725/8,730 a tonne versus $8,720 at Thursday's close.
It hit a record high at $8,966 on Nov. 11.
COMEX copper for March delivery settled up 2.00 cents at $3.9990 per lb, after briefly cracking the psychological $4 level earlier in the session.
Investor confidence was shaken after data showed U.S. employment increased far less than expected in November and the jobless rate jumped to a seven-month high of 9.8 per cent.
Daniel Brebner, an analyst at Deutsche Bank, saw a silver lining in the weaker-than-expected data.
"If unemployment remains quite high the tendency will be to stimulate again," he said, adding that this provided the market with some support. "Quantitative easing is definitely back in the headlights."
Upbeat economic reports out of the euro zone helped to restore some confidence in the outlook for base metals demand.
Euro zone retail sales increased more than expected in October, while data showed the euro zone's service sector economy also pulled ahead in November.
A one per cent fall in the dollar added to the steadier tone, providing some support by attracting non-U.S. investors.
Also bolstering prices was a strike at a top copper mine, Chile's Collahuasi, while inventories in general decline could also underpin prices next week if the strike continues, said investment bank Fairfax.
Union leaders expect to resume negotiations with management at Collahuasi by Sunday at the latest to end a month-long strike, a union leader said on Friday, after the company said talks had broken up.
Investors also eyed developments from Europe's largest copper smelter Aurubis, which said on Friday an accident at its main plant in Hamburg had hit copper concentrate processing operations.
COPPER STOCKS BUILD Inventories of four of the six LME metals rose, the most recent exchange data showed, as traders tidy books and deliver metal into LME sheds to reduce cost of holding inventory over the year end.
Copper inventories saw a rare increase, as high premiums for nearby settlement dates attracts metal into warehouses.
Copper stocks rose by 1,200 tonnes, data showed on Friday. However, stockpiles in LME-bonded warehouses have fallen by over one third since February to 353,625 tonnes and remain close to the lowest levels in over one year.
The premium for cash copper over the three-month benchmark has eased to $55 from almost $63.50 on Thursday.
A London trader said earlier that tightness may be shifting towards January as contracts are rolled over.
"If the cash to threes eases further this afternoon, then I'll stake my hat that the tightness won't flare up again," he said.
LME aluminum was last quoted at $2,319/2,320 versus $2,355, while nickel fell $200 to $23,500.
Lead, which rallied over six per cent on Thursday, was last quoted at $2,338/2,340 from $2,374, while zinc shed $40.50 to $2,219.5.
Tin was at $25,550 versus $25,500 from Thursday.
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