Copper climbed to a 4-month peak late Wednesday, building on the strength of its 2012 risk-on rally after the Federal Reserve said it would keep interest rates low through 2014. The Fed, after a two-day policy meeting, repeated its view that the economy faces "significant downside risks" but held back from announcing another round of monetary stimulus.
The Fed's interest rate promise gave a big shot in the arm to riskier assets like metals, the euro and global equities, all of which recouped early losses and moved onto higher ground. "The Fed is wanting to continue to fuel risk appetite by keeping rates low," said Matthew Zeman, head of trading with Kingsview Financial in Chicago. "I think this just clears the coast for higher equity prices and more risk-taking across the board.
"The market likes low rates, and they got what they were looking for." In New York, the benchmark March COMEX contract settled up 2.20 cents at $3.8295 per lb. Gains were extended in after-hours trade to $3.8505, its priciest level in four months.
Volumes remained strong despite the lack of Asian participants due to the Lunar New Year holiday this week. The Shanghai Futures Exchange and other Chinese financial markets will reopen on Monday, January 30. Close to 59,000 lots traded late in New York, a third above the 30-day average, according to Thomson Reuters preliminary data.
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