Gold tumbled to two-week lows yesterday as weak physical demand for the precious metal reinforced a sharp sell-off triggered by the U.S. dollar's rally against the euro. Gold futures for August settlement fell $10.10 to $952.50.


CLOSING PRICES (SPOT)

Gold US$/troy ounce 952.10 -2.55

Silver US$/troy ounce 14.96 -0.29

Copper US$/lb 2.25 0.00

Lead US$/lb 0.75 0.00

Zinc US$/lb 0.69 -0.01

Aluminum US$/lb 0.72 0.02

Nickel US$/lb 6.45 -0.14

Oil West Texas US$/bbl 68.09 -0.13

Nat Gas Henry Hub US$ mmbtu 3.53 0.02

Nat.Gas AECO C C$/gigajoule 2.74 -0.09

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LONDON - Copper climbed above the psychological $5,000 (U.S.) level on Tuesday, as positive economic sentiment buoyed demand expectations, while a weaker dollar also supported prices.

Aluminum prices, which rose on Monday to their highest level since early January at $1,645 a tonne, were flat.

By 0935 GMT, copper for three month delivery [MCU3 on the London Metal Exchange gained to $5,035.25 a tonne from $4,980 at the close on Monday and compared with a session high at $5,066.

"The gains for the whole complex are quite fragile," said Eugen Weinberg, analyst at Commerzbank. "It is mostly due to upbeat (economic) sentiment, rather than real underlying consumption."

"Copper above $5,000 is quite an important mark...these levels are not currently justified but the market has a positive momentum so we can't rule out higher prices."

"Also, a weaker dollar today after a strong rise on Friday."

The U.S. dollar paused after gains versus the euro as investors reassessed whether speculation of a possible rise in U.S. interest rates later this year may push the U.S. currency higher. A weak U.S. currency makes metals priced in dollars less expensive for holders of other currencies.

The dollar was below a two-week high hit last week after stronger-than-expected U.S. jobs data stoked expectations for a Federal Reserve rate rise later this year.

But it has been Chinese stockpiling that has helped copper prices rise by more than 60 per cent this year, and although this appears to be waning, LME stocks slipped 1,500 tonnes to 296,350 tonnes.

Aluminum, used in transport and packaging, traded at $1,625 versus $1,622.

In recent sessions, aluminum prices have benefited from a rise in material tagged for delivery, which suggested the possibility of stronger demand.

Offering some respite in the over-supplied aluminum market, cancelled warrants - metal tagged for delivery - were at 117,475 tonnes on Monday, compared to 46,800 tonnes on May 8.

But stocks jumped 2,375 tonnes to a record near 4.3 million tonnes.

The tug-of-war in the aluminum market is likely to end in victory for the bears, analysts said, because prices are expected to buckle under the weight of supplies, stocks and bleak demand prospects.

"This upturn in cancelled warrants is metal that is going to be finding its way into China to make up for the trader held metal that is not being released for consumption," said David Wilson, director of metals research at Societe Generale.

"Unlike other base metals there has also been significant short positions...we've also had a few announcements of non-Chinese smelters thinking of re-starting capacity."

"The market at the moment, doesn't need all this excess metal," he added. "Yes, things are improving (economically) but I'm not convinced this price recovery in aluminium is nothing more than technical."

Steel making ingredient nickel traded at $14,501 from $14,300 while battery material lead was at $1,677 from $1,669.

Zinc gained to $1,566 a tonne from $1,545 and tin was unchanged at $14,900.