US copper futures managed to hold on to their morning gains on Wednesday after data showing unexpectedly high February new US home sales gave red metal investors something to cheer about. Earlier, copper prices trimmed gains after data showed a surprise fall in US durable goods orders for the month of February.
"We were up with the other metals earlier, but copper more so than any of the other metals will probably react more to any economic weakness and what it says about demand," said Frank Lesh, broker and futures analyst with Future Path Trading in Chicago.
Copper for May delivery was up 4.25 cents at $3.7210 a lb by 11:01 am EDT (1501 GMT) on the New York Mercantile Exchange's COMEX division, moving between $3.6750 and $3.75. Futures volumes were estimated at 6,517 lots by 10 am.
Copper, a key component in construction, spiked higher after a report showed sales of new single-family US homes fell 1.8 percent in February to an annual rate of 590,000 from an upwardly revised rate of 601,000 in January, the Commerce Department said.
Economists polled by Reuters were expecting February sales to fall to a 580,000 rate from the previously reported rate of 588,000 in January. "The good news in today's report parallels the sideways pattern in existing home sales over the last four months, as revealed Monday, along with the similar sideways trend in the housing starts and permits figures since December at around a 1.0 million rate," analysts at Action Economics said in a report.
The data comes two days after a report that showed the pace of existing homes sales in February rose for the first time since July as prices posted a record drop from their year-ago levels.
In a separate report, new orders for long-lasting US-made manufactured goods unexpectedly fell 1.7 percent during February. A key gauge of companies' appetite for investment also shrank, according to data on Wednesday.
"This report further corroborates the notion that, in addition to the financial crisis, the US faces a real economic downturn," said T.J. Marta, a fixed income strategist at RBC Capital Markets in New York. The durable goods report contrasted with European data on Wednesday that suggested the euro-zone economy was much healthier than that of the United States despite a soaring euro and higher interest rates.
The weaker-than-expected data exerted more downward pressure on the dollar amid heightened expectations of further Federal Reserve easing at its next monetary policy meeting.
The euro rose 0.6 percent against the dollar to $1.5726, less than 2 cents away from its record high at $1.5905 hit last week. A weaker US currency tends to make dollar-priced metals more attractive for holders of foreign currencies.
Stocks of copper in London Metal Exchange warehouses fell by 2,125 tonnes to 118,050 tonnes on Wednesday, and are down more than 40 percent since the start of the year.
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