The price of copper charged to a six-month high above $3.50 a lb in futures trading on Monday, extending a two-month rally that showed little signs of slowing, analysts said.
"Once momentum starts building, it continues building. There is a lot of conviction from the institutional community, and that is exactly what you want to see because when you have prices explode to the upside as we do now, and after several bullish weeks, its strength begets strength," said Adam Sarah, founder of GlobalMacroResearch.com in New York.
Copper for May delivery rallied 12.90 cents or 3.8 percent to close at $3.506 per lb on the New York Mercantile Exchange's Comex division, after dealing from an overnight low of $3.3625 to a session peak of $3.5340 which marked its loftiest level since September. Larry Young, senior trader at Infinity Brokerage Services in Chicago, cited carry-over momentum buying from last week's impressive 7 percent gains.
"Technically, this is a momentum trade for traders, and as long as we don't see too much of a pullback, you're going to see fresh buying coming in, he said, adding "$3.50 is going to be key to pop this market.
You're going to have a lot of buy-entry orders above there to get long if we can take out that level." Final estimated copper futures volumes reached 21,000 lots, compared with Thursday's official count at 14,232 lots.
The market was closed on Good on Friday in observance of Easter. As of April 5, open interest in Comex copper futures increased 1,081 lots to 78,606 contracts. A stronger-than-expected US jobs report on Friday underpinned the momentum rally in copper futures, as the data allayed some concerns about a slump in the housing and manufacturing sectors.
US employers added stronger-than-expected 180,000 new jobs in March, while the US unemployment rate fell to a five-month low. Strength in overseas equity markets also set the tone for copper, with the Shanghai Composite Index hitting an all-time high.
"The equity markets are up in Asia, which is underpinning the copper market as well, in that it still seems to be the economy and it's underlying strength on a world basis continuing to feed the demand bull," said Steve Platt, an analyst with Archer Financial Services in Chicago. Meanwhile, the non-commercial short position in US coppers futures contracted 18.35 percent in the most recent week trade data released on Friday showed.
Comments
Comments are closed.