US copper futures charged up to a one-week high on Friday and while finishing beneath the peak, dollar softness and a boost of confidence from the fresh round of US government aid to banks drew heavy investor buying in commodity markets across the board, traders said. Copper for March delivery settled 7.40 cents, or 5.09 percent, higher at $1.5275 a lb on the New York Mercantile Exchange's COMEX division.
Earlier, copper reached a high at $1.5650, last seen on Monday, up from a low at $1.4885 a lb. Copper rallied with other commodities when the dollar raced up against the euro as fresh government bailout money for US banks eased some investor concerns about stress in the financial sector. Commodities investors jumped back into raw materials across the board as confidence was bolstered following news of new US government aid going out to banks - trader.
The dollar also slid on a decline in the Consumer Price Index, providing room for the Federal Reserve to keep US interest rates low. US CPI fell 0.7 percent in December and was unchanged, excluding food and energy prices. For the year, the index rose 0.1 percent overall and was up 1.8 percent minus food and energy. The red metal later pulled back from its highs on renewed demand concerns following a steeper-then-forecast drop in US industrial output.
US industrial production slid 2 percent, twice the 1 percent decline forecast by analysts. November was also revised lower to a 1.3 percent drop, a slower pace than the 0.6 percent output fall reported initially. Despite Friday's rally, some traders remain wary of becoming too bullish, too soon. "We popped up about 10 days ago, but we've mostly been trading in a range, in a very typical consolidation pattern" - copper trader.
Technicians see near-term support in benchmark March copper at $1.40 a lb, just above January's low, followed by the low set in December at $1.2550, a level last seen in October 2004. Resistance was pegged around $1.60 per lb. COMEX estimated final futures volume at 14,953 lots.
Final volume on Thursday came to 16,531 lots. Open interest lost 1,499 lots to 83,730 contracts as of January 15. Copper may stay rangebound with Chinese markets closed to celebrate the Lunar New Year over the next week - traders. Copper stocks in London Metal Exchange warehouses jumped another 4,200 tonnes on Friday to a new five-year high at 391,525 tonnes.