US copper futures vaulted past the $4.00 a lb level for the first time since early May 2006 on Thursday as investment fund money continued to flow into the broader commodity complex. Copper prices have since backed off that level in early New York business as investors cashed in some profits from the red metal's 32 percent gains since January.
Copper for May delivery peaked at $4.0240 a lb on the New York Mercantile Exchange's Comex division, its first time back above the $4.00 mark since May 2006. By 10:33 am EST (1533 GMT), the contract was down 3.20 cents to $3.95. Spot March was down 4.75 cents to $3.9420, after hitting a session high of $4.0155.
Based on the spot continuation chart, copper hit an all-time record high of $4.16 on May 11, 2006. Futures volumes were estimated at 7,796 lots by 10:00 am. "There's a ton of open interest in it and we're near the end of the week, so I would not be surprised to see a pull-back going into Friday's payrolls report," said Larry Young, senior trader at Infinity Futures Inc in Chicago.
All eyes will be on Friday's 8:30 am EST release of February non-farm payrolls, which should give further insight into the health of the US economy. "It seems participants are looking for poor reading with regard to the non-farm payroll numbers out tomorrow," noted Edward Meir, metals analyst with MF Global. "This will inevitably pressure the dollar once again, (again at new record lows against the Euro this morning), and will also increase the odds of a sharp cut in rates when the Fed meets later this month."
"All this means that commodities will maintain their status as both an inflation hedge and an attractive asset class for investors seeking good returns," Meir said. The National Association of Realtors Pending Home Sales Index, based on contracts signed in January, held steady at 85.9.