The price of copper in New York reasserted itself back above $3 a lb by the close of futures trade on Monday, rebounding from losses linked to fears an interest rate hike in China could slow demand from the world's no. 1 copper consumer, analysts said.
"The bulls in the market still believe that Chinese economic strength is going to persist," said Dan Vaught, futures analyst with A.G. Edwards. Copper for May delivery settled up 1.05 cents to $3.0215 a lb on the New York Mercantile Exchange's Comex division, closer to the upper end of its $2.9675 to $3.0435 session range.
Traders placed initial resistance in the benchmark may copper contract near its 200-day moving average at around $3.07, followed by $3.10. "However, $3.00 will continue to be a pivotal point for this market," one said. Final estimated copper futures volumes reached 3,000 lots, against on Friday's final count at 16,644 lots.
As of March 16, open interest in Comex copper futures increased 1,230 lots to 69,419 contracts. US copper futures opened on the defensive on Monday, pressured by a weaker tone in overseas metals markets following news over the weekend that China's central bank raised interest rates for the third time in less than a year.
The People's Bank of China said that, effective on Sunday, its benchmark one-year yuan lending and deposit rates would rise by 0.27 percentage point each.
That brings the one-year deposit rate to 2.79 percent and the lending rate to 6.39 percent. Despite this attempt by the Chinese government to cool the pace of the economy, copper dealers believed the rate hike would have little impact on the futures market.
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