US copper futures ended with moderate gains on Wednesday as locals and a few speculators and funds added to their holdings by buying the modest dips of a day earlier, traders said. "It was quiet overall today. I think it was mostly local action. And the market was both up and down. We're settling down a little higher on the day, but I'm not sure it's really a reflection of the day because it was so thin and there was no real direction," said one.
Participants seem to be torn between remaining cautious as copper approach levels near multi-year highs and others that are keying off of bullish fundamentals for the metal.
"A lot of people expected a lot of profit-taking this week and they're not seeing it. Instead, you're seeing more fund buying coming into the market on the dips," a trader said. Most-active March copper on the New York Mercantile Exchange's Comex division was 0.55 cent higher at $1.4395 a lb by the end, after trading from $1.4180 to $1.4450.
March copper rose to a seven-week high of $1.4520 on Monday. Spot December futures gained 2.45 cents to close at $1.4675 and other months rose 0.40 to 0.50 cent. Comex estimated final copper volume at 12,000 lots fewer than the 14,553 lots traded on Tuesday. Open interest continued to rise on Tuesday with the total at 97,637 lots, up 939. Some traders pointed out that rising open interest as copper climbs toward the 15-3/4-year high hit in October suggests an overbought condition that could flag a profit-taking pullback.
"Technically, it looks very overbought. At this point the market could take a correction down to $1.33 (in March copper) and still look healthy.
It might even make it healthier to get a correction like that," a chartist said. For now, traders said declines seem to be more gradual, especially as fundamentals argue for higher prices.
One technician said he looks for a short-term target between $1.47 and $1.50 a lb. for March copper futures.
Among on Wednesday's bullish economic readings, the Institute for Supply Management said its index of US manufacturing activity climbed more than forecast in November to 57.8 and up from 56.8 in October.
Analysts said the report showed manufacturing activity remained strong, with improvement in several important categories including orders and employment.
"It's a good report for the economy. It suggests that the gains we've been seeing in payroll employment are probably sustainable," said Gary Thayer, chief economist with A.G. Edwards in St. Louis, Missouri.
Both US personal income and spending rose more than expected in October, and were greater than in September. And though October US construction spending was disappointing at flat, it remained at a record high level.
The dollar brushed aside the stronger-than-forecast data to trade near record lows hit overnight against the euro on Wednesday. A declining dollar improves investments in dollar-denominate assets like copper for overseas buyers.
London Metal Exchange warehouses stocks fell 200 tonnes on Wednesday to 59,775 tonnes, still at there lowest since 1990. LME three-month copper rose to $3,114 per tonne by the on Wednesday evening kerb, up from Tuesday's close of $3,095. It set a range of $3,070 to $3,127 per tonne.
Comments
Comments are closed.