The price of copper rose to a two-week high above $3.30 a lb in New York futures trade on Tuesday after surprisingly strong December durable goods orders restored some investor confidence in the world's largest economy, dealers said.
At the New York Mercantile Exchange's Comex division, copper for March delivery peaked at $3.3185 a lb, its highest level since January 15, before ending the day up 10.95 cents, or 3.4 percent, to $3.2990.
By 1 pm EST (1800 GMT), futures volumes were estimated at 19,343 lots. On Monday, volumes totalled 13,338 lots. Open interest in Comex copper futures increased by 1,809 lots to 87,644 lots open as of January 28. The metal, often seen as a gauge of underlying economic activity, shot higher on the back of the better-than-expected December durables numbers, coming within a few cents of its year high of $3.3785.
"I think we are slowly moving away from some of the economic fears and it is showing itself in the copper with a very impressive rally and an improving technical picture," said Sterling Smith, vice president with FuturesOne in Chicago.
New orders for long-lasting goods rose 5.2 percent during December, a Commerce Department report showed on Tuesday, well above the 1.5- percent increase forecast by economists in a Reuters poll.
The surprise surge in durable goods orders cleared some of the gloom hanging over the market and readied traders for Wednesday's interest rate policy decision by the US Federal Reserve.
The Fed, which begins a two-day monetary policy meeting later on Tuesday, is expected to lower interest rates on Wednesday in an effort to bolster the economy suffering from a credit crunch, falling home values and rising prices that threaten to send the economy into recession.
"It seems to be we have already priced in the Fed at this point, so I don't know if the metals are really going to advance much more on this Fed action. Maybe we'll get a little push if we get the 50 instead of the 25," said Frank Lesh, broker and futures analyst with Future Path Trading in Chicago.
On the fundamental front, state-owned Codelco, the world's largest copper miner, has won four of six court decisions against an edict by Chile's labour ministry that would have forced it to revamp its work force, a company source said.
In December, Codelco challenged a ministry edict that would have required it to directly hire nearly 5,000 currently subcontracted workers across its five divisions.
The company, which produces 1.7 million tonnes of copper per year, is appealing the edict division-by-division and mine-by-mine. On the London Metal Exchange (LME), copper for delivery in three-months settled at $7,291 a tonne, up $231 from Monday's closing level. LME warehouse stocks fell by 400 tonnes to 171,275 tonnes on Tuesday, while Comex copper stocks eased 58 short tons to 13,978 short tons.