RI:Copper hits three-month high on strong US housing data
The most actively traded contract, for September delivery, settled up US6.5 cents, or 1.5 per cent, at $US4.468 a pound on the Comex division of the New York Mercantile Exchange, the highest settlement price since April 8.
The US housing sector, long a drag on the economy of the world’s second-largest copper consumer, showed signs of life in June.
US home construction during the month climbed to its highest level in five months, the Commerce Department said, showing a 14.6 per cent increase from the May levels.
Newly issued building permits, a measure of future building, rose 2.5 per cent on the month, to the highest rate since December.
Copper is sensitive to the construction outlook, as it is widely used in electrical wiring, plumbing and appliances. While the report doesn’t point to a full-fledged recovery in the beleaguered US construction sector, it may suggest that US housing has bottomed out and is on the road to recovery, analysts with Nomura said in a note.
Copper futures had spent much of the last two weeks trading in a narrow range near $US4.40 a pound, with worries about US and European debt capping its gains. The market has drawn support from the view that Chinese demand will continue at a steady pace despite efforts by the country’s government to limit credit and to keep its growing economy from overheating.
“With Chinese growth still chugging along nicely, in spite of tighter monetary conditions, it may be that copper is now also being seen in the same light as gold, and is also benefiting from the wider uncertainty in the global markets and investor interest in hard assets,” Standard Bank analyst Leon Westgate said in a note.
A weaker US dollar added fuel to copper’s rally today. The ICE US Dollar Index, which tracks the currency against those of some major US trading partners, was at 75.082 at the close of Comex floor trading, down from 75.357 late Monday in New York.
Declines in the US currency can boost US dollar-denominated commodities such as copper, as it makes the futures cheaper for buyers using other currencies.
