+ 2.13
+ 1.49%
+ 0.21
+ 0.13%

Rising Prices of Metals Send South African Rand and Australian Dollar Higher Against U.S. Dollar

June 6, 2011 3:58 am
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The prices of metals rose in Monday’s early morning trading. At the moment, gold is trading around $1,545.65, or 0.16% above Friday’s close, while silver rose 1.29% to $36.71. The price of copper is also up, rising 0.95% to $4.162.

Rising prices of metals pushed currencies of metal-exporting countries higher as well. At around 7:28 am GMT, the U.S. dollar lost 0.52% of its value against the South African rand to trade around 6.6784. At the same time, the greenback lost 0.41% against the Australian dollar to stand around 0.9295.

Not all currencies of metal-exporters strengthened against the dollar, however. The Chile peso failed to find support in the increasing price of copper, Chile’s prime export, as the greenback added 0.03% against the Chile peso to trade around 467.85.

The prices of commodities were rising due to increasing demand from China, the world’s biggest consumer of commodities. Traders who believe the prices of commodities will continue to rise as the economies in the developed countries continue to recover will be interested in the PowerShares DB Commodity Index Tracking Fund (NYSE: DBC) or the Goldman Sachs Commodity Index Total Return Index ETN (NYSE: GSP).

Some traders will hope the rising prices of commodities might also increase the value of currencies of commodity exporting countries. These traders will be interested in the CurrencyShares Australian Dollar Trust ETF (NYSE: FXA), the WisdomTree Dreyfus South African Rand Fund (NYSE: SZR) or the CurrencyShares Canadian Dollar Trust ETF (NYSE: FXC).

Other traders will believe the rising inflation in China will limit China’s high growth rates. At the same time, some traders might think that continuing problems in the Eurozone periphery will limit the demand for raw materials in the developed countries as well. These traders might be more interested in shorting the value of commodities. As a result, these traders will closely monitor the PowerShares DB Commodity Short ETN (NYSE: DDP).

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