Investor interest in commodities as an asset class in their investment portfolios helped boost commodity prices in December, according to Scotiabank's monthly commodity price index.
The index, which measures the price trends in 32 of Canada's major exports, rose 2.9% in December from November levels, and 20.7% from the cyclical bottom of the index reached last April.
The search for higher returns given near-record low interest rates around the globe pushed investors to look at commodity-related investments last year. Total global commodity assets under management by investors have risen to US$235 billion by late 2009 compared with $6 billion to $10 billion in 2000.
The metals and minerals index rose 2.9% in December as significant gains in base metals, gold and sulphur compensated for slight declines in the price of silver, cobalt, potash and uranium.
Cooper prices rose to US$3.17 per pound from US$3.03 in November and has continued to rise in January to US$3.36, yielding a 62% profit margin over full break-even costs. Copper price forecasts have been improving, with the average price rising to between US$3.50 per pound to as high as US$4 per pound by the end of 2011.
Zinc and aluminum prices have also risen along with copper due to investor interest in metals instead of any medium-term demand, the report said.
Gold prices also reached an all-time high in December to US$1,226.56 per ounce in intra-day trading on December 4.