Comex copper hits six-week high as dollar remains weak

US copper futures finished with solid gains on Tuesday as short-covering and fund buying buoyed prices to a six-week high as the dollar remained weak against the euro, market sources said. "It was a mixture of follow-through fund and spec buying today. The continued dollar weakness certainly helped support us today and deterred the sellers from selling any great volumes," said one dealer.
Benchmark March copper at the Comex division of the New York Mercantile Exchange settled up 1.9 cents at $1.4585 a lb, which marked its highest settlement since January 3 when it ended at $1.4735.
Trading ranged from $1.4360 and $1.4595.
Spot February ended up 1.75 cents at $1.4870 and the rest rose 1.85 to 2.25 cents. "I think a lot of traders were spooked yesterday, and nobody really wanted to be short today.
If they were, they bought it right back this" said one broker. Traders said the market found support from the dollar's fall to a against the euro following the US January retail sales report. Retail sales fell 0.3 percent, as expected.
Excluding autos, sales rose a robust 0.6 percent. The dollar recovered from its earlier losses against the euro on Tuesday following Treasury Department data that showed US net inflow into US assets in December that was sufficient to offset the US monthly trade deficit.
Net inflows of capital into US assets in the month slowed to $61.3 billion, from an upwardly revised $89.3 billion in November.
Midafternoon in New York, the euro pared gains against the dollar and was trading at around $1.3009 after hitting a high of $1.3052 in the session.
A weaker dollar usually boosts investment in dollar-denominated assets like copper by overseas players.
Analysts said the market would most likely take its direction tomorrow from the Shanghai Futures Exchange (SHFE) as Chinese investors return from their Lunar New Year holiday.
"We'll have to see if they will come in tomorrow and continue the rally or will they see it as a selling opportunity," said one.
Meanwhile, copper exports from Chile, the world's largest producer of the metal, amounted to $1.165 billion in January, up 42 percent from January 2004 due to a global price rally and increased output, according to central bank data released today.
Three-month copper on the London Metal Exchange closed at $3,142 a tonne, up $32 from Monday's late kerb close at $3,110.