Commodities took a breather this week after data from China showed that the world's second largest economy grew at the slowest pace in 10 quarters. While the data raised some concerns about demand for commodities, it supported the belief that China's central bank would extend its soft monetary policy stance as it did in December.

This would offer more liquidity to the market, which supports the case for a further rise in commodities. For now, traders are likely to wait and watch for more cues. Metals have been the biggest gainers so far this year. Copper, nickel, zinc and tin have risen between 12% and 23%.

Traders took some profits in copper this week after the red metal posted consistent weekly gains over the past four weeks. Analysts have cautioned against this sharp rise. Since early January, copper has risen nearly 12% to USD 8,525 per tonne levels and traders are now talking about USD 10,000 again.

The optimism comes as data from China showed that copper imports rose to record highs in December, easing concerns of a slowdown in demand in the largest copper consuming market.

Moreover, LME inventories are currently at a three year low and a majority of the world's largest miners have reported a fall in production for 2011. These factors are likely to exert an upward pressure on prices.

(Sourced from economictimes.indiatimes.com)