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BASE METALS: Weak Dollar Boosts Comex Copper Prices
Aug 18,2011 09:56CST
industry news
Source:SMM
Copper prices climbed above $4 a pound as a weaker dollar and greater risk appetite among investors fanned buying.

Aug 17, 2011 NEW YORK (Dow Jones)--Copper prices climbed above $4 a pound as a weaker dollar and greater risk appetite among investors fanned buying.

The most actively traded contract, for September delivery, was recently 3.40 cents, or 0.9%, higher at $4.0280 a pound on the Comex division of the New York Mercantile Exchange.

Thinly traded August-delivery copper was up 0.85 cent, or 0.2%, at $4.0025 a pound after just five contracts changed hands.

A weaker dollar boosted the appeal of dollar-denominated copper futures to investors holding foreign currencies. Demand for the contracts tends to rise when the greenback eases as dollar-denominated copper seems cheaper to these investors.

The ICE Dollar index was recently at 73.651, down from 74.010 late Tuesday in New York.

Copper prices are also closely following swings in equity markets as both copper and stocks are considered riskier investments than Treasury bonds, and investment demand for these assets tends to rise when risk tolerance grows.

The Standard & Poor's 500 index futures recently traded up 35.00, or 0.3%, at 1195.80.

However, copper prices could see pressure from a weaker Chinese yuan, warns Leon Westgate, a base metals analyst with Standard Bank. China's currency has languished in recent days, after roaring higher as authorities allowed the yuan to appreciate three times in the space of a few days.

But as the yuan stabilizes the advantage of a stronger currency's added buying power wanes, "which has perhaps also seen Chinese participants step back a little" from the copper market, Westgate said.

 

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