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Copper Bounces 2%, Snaps Four-Day Losing Streak
Dec 19,2011 09:16CST
industry news
Source:SMM
Copper prices locked in their first gain in five days Friday as some investors closed out bets on lower prices ahead of the holiday season.

Dec 16, 2011 NEW YORK (Dow Jones)--Copper prices locked in their first gain in five days Friday as some investors closed out bets on lower prices ahead of the holiday season while others treated a weaker dollar and recent declines as a bargain-hunting opportunity.

The most actively traded contract, for March delivery, settled up 6.40 cents, or 2%, at $3.3310 a pound on the Comex division of the New York Mercantile Exchange. It was copper's largest one-day dollar & percentage gain since Nov. 30.

Thinly traded December-delivery copper rose 6.45 cents, or 2%, to settle at $3.3240 a pound.

Copper prices drew support from some unlikely buyers as, with the holiday season in sight, speculators who bet on lower copper prices pared back their exposure to the market by closing out bets on lower prices. For the past 12 consecutive weeks, managed-money funds have had more bets on lower copper prices, or short positions, than bets on higher prices, according to last week's data from the Commodity Futures Trading Commission.

"If you've been short and made some decent profits it made sense to take them off today," said Bill O'Neill, principal with Logic Advisors. Copper prices "could see a little pop at the end of the year" as these investors repurchase previously sold positions and leave the market, he added.

Upbeat news from Europe also buoyed copper prices. Italy's government won a confidence vote on austerity measures in the lower house while Germany, the euro zone's largest economy, is set to avoid a referendum on the euro zone's permanent rescue fund.

The euro strengthened against the dollar on these developments, giving dollar-denominated copper futures a boost as the contracts seem less expensive to buyers who use currencies other than the dollar.

"We suspect that the relative stability in the European debt markets and the euro is leading to some modest buying setting in," said Edward Meir, metals analyst at brokerage INTL FCStone.

Europe continues to dominate traders' attention as the region, second behind China in copper consumption, fights to stem the spread of its sovereign-debt crisis.

Copper prices had declined earlier this week as worries about Europe's debt problems, as well as downbeat economic data from China and the euro zone, pressured prices lower.

Copper is widely used in manufacturing and construction, so demand for the industrial metal tends to move in step with economic activity.

Copper settlements (ranges include electronic and pit trading):
Dec $3.3240; up 6.45 cents; Range $3.2875-$3.3425
Mar $3.3310; up 6.40 cents; Range $3.2680-$3.3775

 

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