Comex copper futures rose on Tuesday, pushing past nearby chart resistance on a mixture of bargain hunting at this week's lower prices as well as short-covering.
The market uncovered support near the $1.15 a lb area previously and appeared to build a base above on Monday's three-month lows, prompting a bounce into the close, traders and analysts said.
Benchmark July copper gained 2.65 cents to $1.1940 a lb., after jumping $1.1905 resistance, within a range of $1.1650-$1.1950. Spot May climbed 2.60 cents to $1.1935, and the rest of the board went up 2.25 to 2.65 cents.
"The technical got overdone on the downside, it had a good settlement yesterday and it gapped higher today, alleviating some of that oversold condition," said Scott Meyers, analyst at Pioneer Futures.
Short selling and long liquidation by funds and speculators had pressured copper in recent days due to a surging dollar, fears US interest rates would rise sooner rather than later and worries over slower growth in the Chinese economy.
That dragged futures further from an 8-1/4-year high from March at $1.40. Since November 2001, copper has worked its way steadily up from 14-year lows near 60 cents a lb, boosted by dwindling refined metal stocks and strong Asian demand.
"I don't know that we'll just shoot back up," Myers said. "I think we're going to do some work between the $1.15 and $1.25 level for a while now before we see another leg up if we see another leg up.
Copper has had a tremendous run in a short period of time." Final estimated volume was 13,000 lots, versus on Monday's tally of 12,687 contracts. Open interest fell 1,219 to 63,134 lots.
At the London Metal Exchange, three-month copper settled $53 higher at $2,596 a tonne.
Copper inventory moves overnight were mixed. LME warehouse stocks rose 375 tonnes to 147,275 tonnes on Tuesday.
Comex stocks fell 2,186 short tons to 158,477 tons on Monday. The US stock market gained ground on Tuesday, while the dollar was higher against the euro as currency traders focused on how a US rate increase will help the greenback.
In its semi-annual Economic Outlook, the Organisation for Economic Co-operation and Development said the world's richest economies are set to grow at their fastest rate in four years in 2004 and policy makers should start trying to cool the US economy sooner rather than later.
The Paris-based think tank said now was the time to change historically loose monetary policy in the fastest growing countries, particularly the United States.
Comex is a division of the New York Mercantile Exchange.
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