Copper prices rose Wednesday on hopes that European officials will craft a broad rescue plan to contain that region's financial crisis.
Copper for December delivery gained 6.95 cents, or 2 percent, to settle at $3.49 a pound. The rally puts copper up nearly 9 percent for the week.
The recent rally in copper is based largely on the belief that European minsters will agree on a far-reaching financial rescue plan for the region's banks and heavily indebted countries like Greece, said John Nadler, an analyst with Kitco Metals Inc.
Copper is up 15 percent since Friday, even though there don't appear to be any fundamental changes in the market for the physical metal itself, Nadler wrote in a note to clients Wednesday. That indicates most of the demand is from speculators who think demand for metals will rise after the European economy starts to recover.
Copper prices rose sharply this summer, trading as high as $4.48 a pound on July 29. But prices fell last month in part because demand for copper was weaker than expected in the U.S. housing market and elsewhere.
Nadler was skeptical that this week's rally will last. It could also be deflated if traders realize the bets on copper's future value pushed the metal's price far higher than actual demand can support.
"For my money, the let-down could be devastating. The sell-offs could be monumental," Nadler wrote.
Gold for December delivery rose $23.10, or 1 percent, to settle at $1,723.50 an ounce. December silver was up 25.8 cents, or less than 1 percent, to close at $33.31.
In other trading, December palladium fell $6.05, or almost 1 percent, to $646.05 an ounce. January platinum gained $28.40 to finish at $1,597.20 an ounce.
Crop prices fell. December wheat fell 16.75 cents, or 2.6 percent, to finish at $6.195 per bushel. December corn lost 13.5 cents, or 2 percent, to end at $6.3725 per bushel. November soybeans dropped 15 cents, or 1 percent, to finish at $12.105 a bushel.
Oil prices also dropped. Benchmark oil fell $2.97, or 3 percent, to $90.20 per barrel on the New York Mercantile Exchange.
Heating oil fell 3.02 cents to finish at $3.021 per gallon, gasoline futures dropped 4.94 cents to close at $2.6253 per gallon and natural gas lost 6.8 cents to close at $3.658 per 1,000 cubic feet.
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