Aug 26, 2011 NEW YORK (Dow Jones)--Copper futures edged higher Friday, reaching a three-week high as traders took cues from equity markets that rallied on Federal Reserve Chairman Ben Bernanke's outlook for the slumping U.S. economy.
Copper for September delivery, the most actively traded contract, rose 2 cents, or 0.5%, to settle at $4.099 a pound on the Comex division of the New York Mercantile Exchange, the highest settlement price since Aug. 5.
With little in the way of copper-specific news this week, traders have taken cues from outside markets, at times following equities as a proxy for investor sentiment toward risky assets such as commodities. The industrial metal in particular is sensitive to investors' view of the growth outlook because of its widespread uses in construction and manufacturing.
The Dow Jones Industrial Average was up 129 points at 11278 at the close of Comex floor trading, buoyed by Bernanke's comments at an economic symposium in Wyoming. The central bank chief didn't signal any immediate steps to prop up the U.S. economy, but reiterated that the bank stands ready to take action, and said the topic will be discussed at a longer-than-normal meeting in mid-September.
"While consumer demand is nowhere near pre-2008 levels, there is evidence to suggest that things are not all doom and gloom," traders with RBC Capital Markets said in a note, highlighting expectations for constrained supply in the copper and aluminum markets.
Copper drew support Friday from the view that supplies of the industrial metal are tightening, market participants said.
Stockpiles of the metal stored in Shanghai Futures Exchange warehouses fell this week by 9,756 metric tons, to 102,258 tons, according to exchange data.
Also lifting sentiment was the potential that further strikes at Freeport-McMoRan Copper & Gold Inc.'s (FCX) massive Grasberg mine could curb output there, analysts said. A strike at the Indonesian mine last month slashed output by 35 million pounds.
The copper market has been lifted for much of the last year by the view that mine supply wouldn't be able to be able to keep up with rising demand.
Copper futures came under pressure earlier Friday after the U.S. government lowered its estimate for second-quarter growth. Gross domestic product rose 1.0% during the quarter, the Commerce Department, lower than the previous estimate for a growth rate of 1.3%.
The revision didn't come as a surprise to market participants, but underscored the concerns that growth in the developed world is slumping.
Copper settlements (ranges include electronic and pit trading):
Aug $4.0990; up 2.0 cents; Range $4.0570-$4.0990
Sep $4.0990; up 2.0 cents; Range $4.0455-$4.1260