Copper Futures Gain in New York as Dollar Declines, Oil Rallies

By Millie Munshi

Aug. 27 (Bloomberg) -- Copper gained as a decline in the dollar and a rise in energy costs increased demand for commodities as a hedge against inflation.

The dollar fell as much as 0.8 percent against a basket of the euro, yen and four other major currencies. Crude oil gained as much as 2.9 percent. Some traders buy raw materials to preserve purchasing power. Before today, copper gained 12 percent this year as the dollar slumped to a record versus the euro and fuel prices soared.

The metal advanced ``in the wake of the direction dictated by oil and the dollar,'' Alex Heath, the head of base metals trading at RBC Capital Markets in London, said in a report.

Copper futures for December delivery advanced 3.25 cents, or 1 percent, to $3.449 a pound at 9:41 a.m. on the Comex division of the New York Mercantile Exchange. The price reached a record $4.2605 on May 5.

The metal extended gains after a report showed orders for U.S. durable goods unexpectedly increased in July, easing concern that an economic slump will curb metals demand.

Bookings of goods meant to last several years climbed 1.3 percent, the Commerce Department said. Economists projected orders would be unchanged, according to the median of 76 forecasts in a Bloomberg News survey.

On the London Metal Exchange, copper for delivery in three months rose $60, or 0.8 percent, to $7,640 a metric ton ($3.46 a pound). Before today, the price gained 3.6 percent in the past 12 months.

To contact the reporter on this story: Millie Munshi in New York at mmunshi@bloomberg.net