US copper futures raced higher on Tuesday on fund buying ahead of the quarter end, then added to gains after the declining US consumer confidence reading put pressure on the dollar, traders said. "We had some decent fund buying in here. The euro's coming back based on yesterday's action. Between that and the fact that there's fund buying, the market's up," said one trader, who added that he sees scope for May futures to charge another penny higher.
At the COMEX division of the New York Mercantile Exchange, benchmark May copper rose 1.65 cents to $1.4710 a lb, after hitting an early high at $1.4780. The low was $1.4510.
Spot March copper advanced by 1.95 cents to $1.48 a lb. A few of the rest increased by 1.30 to 2.05 cents. COMEX estimated 0900 am EST copper at 5,000 lots.
Copper increased its lead in reaction to a gaining euro, because a weaker dollar enhances overseas investors' purchases of dollar-denominated assets like copper.
The euro regained some of the ground lost to the dollar after the US consumer confidence gauge slipped in March as higher gasoline prices dampened the moods of car-reliant Americans. The Conference Board said its gauge of sentiment eased to 102.4 in March from a revised 104.4 in February.
"It's a little more evidence that growth in the economy has downshifted a bit, but that's what happens when higher energy costs take money from people's pockets," said Dana Johnson, chief economist at COMERICA. Copper traders said some speculators began buying on Monday to cover short copper positions after being stopped out of long positions in last week's rout.
By Tuesday, with London traders returning from their long holiday, funds joined speculators in buying copper. Funds still hold massive long positions, and with copper still in short supply, some players are betting they may add to their copper investment in the new quarter.
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