Feb 03, 2012 NEW YORK (Dow Jones)--Copper futures roared higher Friday as a better-than-expected U.S. employment report boosted investor confidence in the economic recovery and as traders who bet on lower copper prices were forced to cover those positions with purchases.
The most-actively traded contract, for March delivery, settled 12.05 cents, or 3.2%, higher at $3.9015 a pound on the Comex division of the New York Mercantile Exchange. The contract touched a high of $3.9090, just off the year's high of $3.9390 set Jan. 27.
U.S. nonfarm payrolls rose by 243,000 in January, beating economists' expectations of a 125,000 increase, while the jobless rate fell to 8.3%, from 8.5% in December.
Copper futures rallied on the report as the data curbed worries about a slowdown in jobs growth, instead showing that the labor market recovery continued to gain momentum into the new year. Copper is widely used in everyday goods such as laptop computers, cars and air conditioners, and employed consumers have more money to spend on such products.
Traders who held short positions, or bets on lower copper prices, added to copper's gains by entering the market as buyers in order to close out their losing bets, said George Gero, vice president at RBC Capital Markets Global Futures.
"Today's report is likely to give equities, industrial-metals prices, and oil prices a nice boost," said Jason Schenker, president of Prestige Economics.
But digging further into the labor-market data could give investors a reason to pause, he added. A lower labor force participation rate and seasonal adjustments to January's employment numbers meant the 'not-in-the-labor-force' part of the population went up by 1.2 million.
"This is not a fundamentally positive way to see the unemployment rate fall," Schenker said.
Moreover, Friday's reactionary rally isn't the best time for investors to establish or increase their copper holdings, said Bob Haberkorn, senior commodity broker with RJO Futures.
"I'm not about to be the guy who buys copper at the high, after the jobs report," Haberkorn said. "I would rather be getting in on a dip, in the low $3.70 area."
Copper settlements (ranges include electronic and pit trading):
Mar $3.9015; up 12.05 cents; Range $3.7775-$3.9065
Apr $3.9085; up 12.00 cents; Range $3.7900-$3.9110