Updated from 12:44 p.m.

Copper prices caught fire Tuesday as the dollar weakened against the yen.

Contracts for December delivery of the red metal popped 16.35 cents to close at $3.6225 a pound, up 4.7% on the Comex division of the New York Mercantile Exchange.

New fund buying and a weak dollar against the Japanese currency were behind the move, says Edward Meir, a metals analyst at Man Financial commodity futures brokers. The dollar was buying 115.74 yen Tuesday, compared with 117.11 yen late Friday.

Meir says the copper move was likely magnified when buy stops were triggered at around $3.52, sparking even greater buying.

Shares of copper miner

Southern Copper

(PCU)

were gaining 4.5% by midafternoon spurred on by hot metal prices. Also gaining was

Phelps Dodge

(PD) - Get Report

not only boosted by the rising metal price, but also by news that its attempts to buy Canadian nickel miner

Inco

(N)

have

come to an end.

Elsewhere in base metals, Citigroup downgraded aluminum producers

Alcan

(AL) - Get Report

and

Alcoa

(AA) - Get Report

to hold from buy. It upgraded

Freeport-McMoRan Copper and Gold

(FCX) - Get Report

to buy from hold.

Shares of Alcoa were down fractionally; those of Alcan were up a hair, while Freeport was ahead 4.4%.

In precious metals, December gold futures were surging, closing up $14.30 at $647 an ounce on the Nymex, with seasonal buying from Asia buoying demand. The bullion exchange-traded funds

iShares COMEX Gold Trust

(IAU) - Get Report

and

streetTRACKS Gold Shares

(GLD) - Get Report

were rallying in line with the metal.

"There is increasing evidence of physical buying in the market place," says Rhona O'Connell, a metals markets analyst at GFMS Analytics in London. "September is expected to be a relatively strong month, and the fourth quarter as a whole should see gold prices working higher."

The European Central Bank system published data showing it had sold slightly less than two tons of gold last week, well short of the estimated 150-plus tons remaining in the sales allowance, which runs through Sept. 26 under the terms of a multi-lateral agreement.

Some observers don't see the ECB's recent relative absence from the market as permanent, however.

Investors "may see central bank sales accelerated slightly in the fourth quarter," as member banks start to use their new quotas, adds O'Connell. But she expects demand for jewelry fabrication to be strong enough to absorb the additional supply without squashing prices.

State Street Global Advisors reported that August was the third straight month of zero redemptions for its Gold Shares bullion-holding ETF, although the frenetic pace of investor buying seems to be cooling off. August inflows were a paltry $152 million vs. $321 million in July and $475 million in June. The year-to-date net inflow is $2.4 billion.

The supercharged bullion prices were helping lift spirits in the precious metals sector, with shares of gold miners

Crystallex International

(KRY)

and

Gold Fields

(GFI) - Get Report

shooting higher, up 16% and 8.2% respectively.

Also gaining were shares of

Yamana Gold

(AUY) - Get Report

up 4.8%, and those of

Kinross Gold

(KGC) - Get Report

, ahead 4.5%.