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BASE METALS: Strength In Equities Helps Copper Close Higher
Aug 18, 2010 08:59CST
Source:SMM

NEW YORK, Aug 17, 2010 (Dow Jones Commodities News via Comtex) --

Strength in the equities market and a continued downward trend in inventory levels Tuesday helped copper futures recover from last week's slump, with investors' appetite for risk starting to return.

Copper for December delivery settled 5.8 cents, or 1.8%, higher at $3.3585 a pound on the Comex division of the New York Mercantile Exchange.

Inventories of copper stored in London Metal Exchange warehouses fell by 1,675 metric tons Tuesday, leaving them at 405,025. The most recent Comex inventory data, released late Monday afternoon, showed that stockpiles at Comex warehouses were down 167 short tons at 97,220 short tons.

"It appears the bulls are willing to resume buying today," said Michael Gross, broker and futures analyst with OptionsSellers.com.

The equity markets moved higher Tuesday as a buzz of deal activity lifted material stocks. Copper, seen as an economic indicator because it's widely used in manufacturing and construction, often closely tracks the stock market.

If the equity markets continue to bounce this week, Gross thinks copper can easily take out its August high of $3.4305 a pound, which it hit Aug. 4.

Tuesday's gains were being driven by emotions rather than fundamentals, said Ralph Preston, senior market analyst with Heritage West Financial, noting that there wasn't much positive economic news that could be driving the momentum. It was mainly about risk appetite Tuesday, he said.

Investors "are taking a little bit of risk in hopes of finding reward in the copper market," he said.

Copper settlements (ranges include electronic and pit trading):
Sept $3.3385; up 5.9 cents; Range $3.2740-$3.3520
Dec $3.3585; up 5.8 cents; Range $3.2975-$3.3710
 

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