Jun 19, 2012 (Dow Jones) NEW YORK--Copper futures mirrored gains in the euro Tuesday in cautious trading as investors awaited the start of a two-day Federal Reserve policy setting meeting and looked for fresh developments in the euro zone.
The most actively traded contract, for July delivery, was recently up 2.25 cents, or 0.7%, at $3.4180 a pound on the Comex division of the New York Mercantile Exchange.
Copper futures kept to a tight trading range, taking their cues from the currency markets as investors kept to the sidelines ahead of a closely watched policy statement from the Fed due Wednesday.
The euro marched higher against the dollar, recently trading at $1.2648, up from $1.2568 earlier. Copper is priced in dollars and becomes cheaper for buyers who use other currencies when the dollar weakens, luring these traders to the market.
"Investors will likely not be doing much in any of the markets until tomorrow when the Federal Reserve meets and issues its usual policy statement," said Edward Meir, senior commodity analyst with INTL FCStone, in a report.
Investors are hoping to see hints of new easing measures from the central bank, as policies that encourage growth are likely to boost demand for copper. The industrial metal is widely used in construction and manufacturing.
However, more easy money is unlikely given recent U.S. economic data, Mr. Meir said.
"We could be in store for another modest selloff on the back of yet another 'watch and wait' statement coming out of the Fed," he said.
A burgeoning deal among Greek politicians to form a government helped soothe trader anxiety over the debt-laden country's ability to secure the next tranche of aid installments. Greece must enforce pre-agreed austerity measures to continue receiving bailout aid from its euro-zone partners.
Without such aid, Greece risks a messy exit from the currency union that is seen as a threat to the financial stability of the entire euro zone.