Copper prices were rallying again Monday amid continued concerns that supplies of the metal are getting too tight.

May-dated copper contracts were adding 6 cents at $3.43 a pound on the Comex division of the New York Mercantile Exchange. The

PowerShares DB Base Metals

(DBB) - Get Report

exchange-traded fund, which tracks copper and other metals, was gaining 1.5% in recent action.

Inventories of copper in London Metal Exchange warehouses have dropped about 16% since early February, fueling a surge in prices of more than 40% during the same period.

"The metal seems to be going to China, and some of it probably going to India, too," says George Gero, vice president of global futures at RBC Capital Markets in New York.

Asia's construction sector has been booming, and copper is essential for the electrical wiring in new buildings. "The combination of rising volumes, higher closing average prices and higher open interest," is also attracting momentum speculators, Gero adds.

Elsewhere in base metals, BMO Capital Markets was busy changing its ratings on several stocks. The firm upped its view on zinc producer

Teck Cominco

(TCK)

to an outperform rating from market perform, sending the shares 0.5% higher.

Separately, BMO dinged diversified miners

BHP

(BHP) - Get Report

and

Anglo American

( AAUK) with downgrades -- the former to a market perform from outperform, and the latter to underperform from market perform.

BHP was rising 0.2%, while Anglo American was virtually unchanged in recent action.

CIBC World Markets cut uranium miner

Cameco

(CCJ) - Get Report

to a sector perform rating from sector outperform, but the shares were rallying 0.7% in recent action.

As for precious metals, gold prices were edging higher by $2.40 at $681.80 an ounce on the Comex.

The ETFs that hold bars of bullion,

streetTracks Gold Shares

(GLD) - Get Report

and

iShares Comex Gold Trust

(IAU) - Get Report

, were slightly higher also.

Providing something of a damper to the gold bulls was news out Friday from the Economic Cycle Research Institute indicating its future inflation gauge remains in the cyclical downswing that began in the fall of 2005. Some investors buy bullion as a hedge against the asset-withering effects of generally rising consumer prices.

"Many deride the

Federal Reserve's

hawkishness, despite the housing and auto recessions," notes T.J. Marta, a fixed-income strategist at RBC Capital Markets in New York. "But at least we know they are manning the ramparts this time around."

Still he adds, the "Fed always has to be vigilant," especially with the potential for energy supply disruptions from Iraq or Iran.

Energy in general, and oil in particular, are seen as key drivers of cost-led inflation. Therefore, crude price spikes caused by an interruption of oil exports from the Middle East can raise inflation fears among investors.