Apr 27, 2012 NEW YORK (Dow Jones)--Copper prices settled at their highest level in more than three weeks as gains in equity markets, a weaker dollar and hopes of further monetary stimulus stocked investor appetite for the industrial metal.

Copper for May delivery, the most actively traded contract, ended 5.30 cents, or 1.4%, higher at $3.8200 a pound on the Comex division of the New York Mercantile Exchange. This was the highest settlement price since April 3 and the fourth consecutive day of gains.

Copper's gains came after downbeat U.S. economic data, as investors wagered that slower growth would lure the Federal Reserve into launching a third quantitative stimulus program.

The U.S. economy expanded at a slower rate during the first quarter than economists had forecast. Gross domestic product, the broadest measure of all the goods and services produced in an economy, grew at an inflation-adjusted annual rate of 2.2% in the first three months of 2012. The gain fell short of forecasts which called for a 2.6% growth rate during the period.

"Copper should not be liking this," said Sterling Smith, analyst with Country Hedging.

Copper's widespread use in construction and manufacturing makes its price vulnerable to pressure from weak economic data, as it signals lower demand for the metal.

But instead of heading lower, copper prices rallied on the U.S. growth data, as investors hoped the bad report would pressure Fed Chairman Bernanke into launching more monetary stimulus in the months ahead.

Copper derives a twofold benefit from quantitative easing. Initially, copper prices rally as investors flock to hard assets like commodities to protect their wealth against the inflationary risks of monetary stimulus. Later, as the stimulative measures percolate throughout the economy and business activity picks up pace, physical demand for the industrial metal increases and further lifts copper prices.

The Federal Reserve's latest policy statement, released April 25, suggested that such stimulative measures remain on the table should economic growth stall.

Copper prices also caught a boost from a weaker dollar, which retreated against other currencies on the GDP data.

Copper is priced in dollars and seems less expensive to investors using foreign currencies.

Copper settlements (ranges include electronic and pit trading):
May  $3.8200; up 5.30 cents; Range $3.7485-$3.8250
July $3.8250; up 5.15 cents; Range $3.7545-$3.8300