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Nickel Heads for Biggest Gain in 3 Years Before Index Change

By Chanyaporn Chanjaroen

Jan. 4 (Bloomberg) -- Nickel headed for its biggest weekly gain in more than three years in London on speculation demand for the metal as an investment will increase as commodity indexes increase its weighting. Copper and lead also rose.

Investors in the Dow Jones AIG Commodity Index may buy an additional 3,000 lots of nickel, equal to 18,000 metric tons, RBC Capital Markets said in a report yesterday. That's more than a third of stockpiles tracked by the London Metal Exchange.

``Index buying and the new year have seen prices surge,'' David Thurtell, an analyst at BNP Paribas, said today. Thurtell started monitoring commodities in 1999.

Nickel for delivery in three months on the LME rose $950, or 3.3 percent, to $29,900 a metric ton as of 8:16 a.m. in London. A close at that price would be a 13 percent weekly gain, the biggest since the week ended Sept. 24, 2004.

Copper added $105, or 1.5 percent, to $7,075 a ton after inventory tracked by the Shanghai Futures Exchange fell 5.7 percent to an 11-month low of 24,148 tons.

Lead rose $20, or 0.8 percent, to $2,690 a ton. Aluminum added $7 to $2,512 a ton and tin was unchanged at $16,800. Zinc dropped $10 to $2,565 a ton.

Following are technical gauges for nickel:

20-day moving average              26,692
100-day moving average             29,428
200-day moving average             35,427
14-day relative strength index     63.16

Fibonacci        Start    End             50%            61.8%
                 24,800   51,800          38,300         41,486
To contact the reporter on this story:
Chanyaporn Chanjaroen in London at 
cchanjaroen@bloomberg.net