Comex copper ended with healthy gains on Thursday, driven mostly by a strong dollar and underlying copper supportive fundamentals in a very light trading session, traders said.
They said Comex trading was light and much of the action took place among day-traders on the Comex floor and speculators, but the positive tone in the market helped keep copper on the plus side.
Other traders said the weak dollar and higher copper prices on the London Metal Exchange provided a positive backdrop for Comex prices. "There's not that much to say about today, aside from the fact that inventories are very low on the LME.
It traded at the high on 12 lots and then it immediately came back down on nothing," said one copper dealer. Benchmark December copper on the New York Mercantile Exchange's Comex division closed up 1.20 cents at $1.3135 a lb after peaking at $1.3210.
Spot October rose 1.25 cents to $1.3185 and the rest gained from 0.45 to 1.15 cents. Comex estimated final copper volume at 9,000 lots, down from 11,450 contracts traded on Wednesday.
LME inventories had fallen to 84,025 tonnes by Thursday. Some traders said they thought many players probably needed to see December copper hold definitively above $1.31 or $1.32 per lb. for them to establish new long positions.
"I think it's too soon after the big dump for anyone to establish any sizeable positions." he added, referring to copper's slippage last week. Last on Wednesday, copper lost more than 10 percent when a confluence of factors unwound a heavily overbought market, sending copper down to one-month lows.
Many participants are still smarting from the steep declines. On Thursday, copper was helped by the softer dollar. The dollar fell to new lows as tepid prospects for the US economy, widening deficits and uncertainty over the outcome of the US presidential election cast a bearish sentiment on the US currency.
A declining dollar offers overseas investors an advantage on dollar-denominated assets like copper. A jump in weekly US jobless claims also helped copper. First-time filings for US jobless benefits fell a more-than-expected 25,000 in a report released on Thursday that was viewed as a positive sign for job growth.
Hurricanes that battered Florida and other Southern states during August and September were not a significant factor behind the drop in initial claims. Later, copper benefited from an increase in the OctoberPhiladelphia Federal Reserve's business activity index.
Some copper participants remain bullish from the sidelines, citing strong fundamentals like twin labour strikes in Mexico, declining inventories, robust demand, and a declining dollar.
Though copper found support from a two-pronged strike in Mexico, some players said they thought the impact had already been built into prices.
London Metal Exchange three-months copper finished the on Thursday evening kerb at $2,825 836 per tonne, up from Wednesday's close at $2,798. The range extended up to $2,850 and the low of $2,802 was above yesterday's nadir.
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