LONDON, Oct. 30 -- Copper prices jumped the most in a week after a report showed that the U.S. economy, the world's largest, expanded for the first time in a year.
Third-quarter gross domestic product, the broadest measure of economic activity, climbed at a 3.5 percent annual pace, the U.S. Commerce Department said today. Economists said the report signaled the end of the worst recession since the 1930s. Copper prices have more than doubled this year on speculation that a global economic recovery will boost demand for raw materials.
"We still believe the trend of economic recovery has only just started," said Thomas Benedix of Tiberius Asset Management AG. Benedix helps manage the Tiberius Commodity Alpha OP fund, which has 20 percent of its assets in industrial metals. "If the actual demand comes in as we believe, prices should continue to go higher," he said.
Copper futures for December delivery climbed 9.9 cents, or 3.4 percent, to $3.0295 a pound on the New York Mercantile Exchange's Comex division. That marks the biggest gain for a most-active contract since Oct. 21.
Growth in global demand for copper will help turn this year's market surplus into a 2010 deficit, according to a Tiberius forecast.
On the London Metal Exchange, copper for three-month delivery rose $234.50, or 3.6 percent, to $6,664.50 a metric ton ($3.02 a pound).
Copper has the "best fundamentals" among industrial metals, even after this year's gains, and may rise to $8,000 a ton next year in London, Benedix said from Stuttgart, Germany. The Alpha OP fund manages 300 million euros ($445 million), Benedix said.
Rising U.S. unemployment and slower demand from home builders may limit price gains, said Patrick Chidley, a Barnard Jacobs Mellet LLC analyst in New York. First-time claims for jobless benefits in the U.S. slid to a seven-month low last week, according to the Labor Department, declining less than forecast by economists. New-home sales fell 3.6 percent last month from August, while economists had forecast an increase.
Copper futures in New York dropped 3.4 percent in the past three days, the longest slump in six weeks, as U.S. economic reports suggested demand for the metal may weaken. Homebuilders are the biggest users of the metal, putting about 440 pounds (200 kilograms) into the average house, according to the Copper Development Association.
"Positive economic news brings in a lot more speculation, but it's not really reflective of an increase in real demand," said Chidley of Barnard Jacobs Mellet. "I'm a bit worried that copper had run ahead of itself and it's quite a risky trade now."
Among other LME metals for three-month delivery, aluminum, nickel, lead, tin and zinc prices rose.