US copper ends at highs

Comex copper futures closed near session peaks on Wednesday, but conditions were extremely thin and volatile ahead of Thursday's decision by the Federal Reserve on how much higher interest rates will go, sources said.
"It was another choppy day, with thin volumes pushing it around," said one Comex floor dealer. "Nobody knows what's going to happen tomorrow, so nobody is sticking their neck out chasing this market.
Most of the money is just sitting it out on the sidelines waiting to see what the Fed does," said one Comex floor dealer. Benchmark September copper closed up 10.10 cents, or about 3.3 percent, at $3.1870 a lb on the New York Mercantile Exchange's (Nymex) Comex division, at the upper end of its $3.0315 to $3.1910 trading range.
Resistance continued to be seen at the $3.25-$3.30 a lb area, while psychological support was pegged at the $3.00 level. July copper, which was set to become the spot contract after the close, climbed 10.60 cents to $3.2930 a lb, and the current spot June contract expired up 14.60 cents at $3.4330.
Comex final copper volume was estimated at 17,000 lots, in line with Tuesday's count at 18,188 lots. The Federal Reserve is widely expected to lift its benchmark federal funds rate for a 17th straight time on Thursday, to 5.25 percent from 5 percent, while some in the market were predicting a wider hike of 50 basis points.
"I think there is actually the distinct possibility that we can see 50 basis points," said Emanuel Balarie, senior market strategist with Wisdom Financial. The focal point will be on the post-meeting statement which traders will monitor for clues as to the pace of future policy tightening.
"The Fed is data dependent, and inflationary rates in the core CPI (Consumer Price Index) have leaped in the last three months, so if Bernanke comes out and says this is a 50 basis point increase, but we're going to pause in August that could actually be a better-case scenario for the stock market," Balarie said.
Fundamentally, lingering supply threats and falling inventory levels should continue to underpin the market, limiting any significant price decline, dealers said. London Metal Exchange-monitored warehouse stocks fell 50 tonnes at 93,000 tonnes on Wednesday, while Comex inventories were up 778 short tons at 8,174 tons on Tuesday.