Copper in London May Pare Third Weekly Advance Before U.S. Payrolls Data

Sep 3 (Bloomberg)--

Copper, trading near a four-month high, may pare a third weekly advance ahead of a report that economists forecast will show employment in the U.S., the world’s second-biggest user, slowed in August. Shanghai copper headed for its best week in six.

Three-month delivery copper was little changed at $7,633 a metric ton on the London Metal Exchange at 2:32 p.m. in Singapore. The metal climbed to $7,689 a ton yesterday, the highest level since April 27, on better-than-expected data from the U.S. and China this week. In Shanghai, December-delivery copper was little changed at 59,880 yuan ($8,803) a ton, 3.6 percent higher this week, the most since the week ending July 23.

"Base metals maintained gains despite LME warehouse data showing inventory builds in most metals, suggesting the market is currently focusing more on the macro-demand backdrop rather than supply,” Mark Pervan, head of commodity research at Australia & New Zealand Banking Group Ltd., wrote in a note today. Prices have declined from their peaks “as investors turned their attention to the pending U.S. jobs data,” he said.

Private payrolls that exclude government agencies rose by 40,000 after a 71,000 July gain, and the jobless rate climbed to 9.6 percent, according to the median estimate of economists surveyed by Bloomberg News. Total employment may have dropped for a third consecutive month as census workers were let go.

Inventories of copper in LME warehouses rose for a second day to 399,475 tons yesterday. Stockpiles of the metal tallied by the Shanghai Futures Exchange also increased last week.

Technical Analysis

Technical charts some traders use to forecast movements suggested copper’s rally may be capped by its two-year downtrend line resistance of $7,851, Karen Jones, Commerzbank AG’s head of fixed income, currency and commodities technical analysis research, wrote in a report yesterday.

Copper is currently supported by the 200-day and 55-day moving averages at $7,108 and $6,963 respectively, as well as the three-month uptrend line support at $6,931, Jones wrote. An “upside bias” remains above these levels, she added.

Below these levels would see copper target the mid-July low of $6,470, mid-May low of $6,415, February low of $6,225 and June low of $6,037.50, wrote Jones.

Copper in London is still up 2.3 percent this week after U.S. initial jobless claims fell and pending home sales unexpectedly increased. In China, the purchasing managers’ index rose more than forecast to 51.7 in August from 51.2 in July, beating a median estimate of 51.5 in a Bloomberg News survey, a government-backed report showed Sept. 1.

Aluminum in London was little changed at $2,148 a ton, zinc declined 1 percent to $2,152.25 a ton, and lead was little changed at $2,153 a ton. Nickel gained 1.3 percent to $21,920 a ton, and tin rose 0.4 percent to $21,500 a ton.