Both Copper and Gold gained after it was reported that China cut reserve requirements for lenders and anticipation that European finance ministers would approve a loan for the Greek bailout. Policy easing, in an effort to spur lending by banks, supported investor appetite for riskier assets.
Feb. 20, 2012, 12:26 p.m. EST
By Kate Gibson and Sara Sjolin
NEW YORK (MarketWatch) — Copper and gold gained Monday after China cut reserve requirements for lenders and markets anticipated that European finance ministers would approve another loan for Greece.
“The metals and markets in general have been boosted following the cutting of reserve ratios in China,” William Adams, head of research at FastMarkets.com, wrote in emailed research.
“Given the emergence of more quantitative easing the weight of money is likely to remain a bullish factor so although we don not feel the fundamentals justify these high price levels, it is likely to take a catalyst to trigger a more meaningful correction,” he added.
Copper futures for March delivery HGH2 +1.27% rose 1.1% to $3.748 a pound in electronic trade on the Comex division of the New York Mercantile Exchange. Gold futures for April delivery GCJ2 +1.72% climbed $10.10, or 0.6%, to $1,736 an ounce.
U.S. markets were closed Monday for the Presidents Day holiday.
The policy easing by China, a major consumer of metal and other commodities, supported investor appetite for riskier assets. The People’s Bank of China Saturday said it was reducing the amount of money banks need to hold in reserve to spur lending and increase liquidity. The move comes after a like step in December.
Investors also looked to expectations that European officials meeting in Brussels would agree on conditions for new loans for Greece.
“We would expect Europe’s finance ministers to agree to further Greek financing today and leave only relatively minor technical details to be resolved. That could see further gains in the commodity and emerging currencies this week,” wrote Nick Bennenbroek, head of currency strategy at Wells Fargo Bank, in emailed research.
The euro EURUSD +0.07% rose against the dollar to $1.3245. The dollar index DXY -0.22% , which measures the greenback against six other currencies, slipped to 78.961.
A sliding dollar furthers the allure of commodities traded in the U.S. currency to holders of other currencies as it makes them less pricey.
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