IV:Copper futures hit 1-week high; U.S. fiscal talks in focus
Investing.com - Copper futures rose to a one-week high in light trade on Thursday, amid hopes U.S. lawmakers will reach a deal to avoid the fiscal cliff ahead of the January 1 deadline.
On the Comex division of the New York Mercantile Exchange, copper futures for March delivery traded at USD3.603 a pound during European morning trade, up 0.15% on the day.
New York-traded copper prices rose to a session high of USD3.612 a pound earlier in the day, the strongest level since December 20.
Market players remained focused on developments surrounding the fiscal cliff in the U.S., approximately USD600 billion in automatic tax hikes and spending cuts due to come into effect on January 1.
President Barack Obama was to end his vacation and return to Washington on Thursday in order to take part in talks to avert the crisis ahead of the year-end deadline. Both chambers of Congress are also due to return to work on Thursday.
Without a deal, the U.S. could fall back into recession and drag much of the world down with it.
In addition, U.S. Treasury Secretary Tim Geithner said Wednesday that the USD16.4 trillion debt ceiling limit will be hit on December 31. Geithner added that "accounting measures" will be taken to create "headroom" in order to delay a technical violation.
The temporary moves would create USD200 billion in “headroom,” enough to last for approximately two months under normal circumstances.
The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, was down 0.3% to trade at 79.47.
A weaker dollar boosts demand for raw materials as an alternative investment and makes dollar-priced commodities cheaper for holders of other currencies.
Copper prices found additional support after data showed profits earned by Chinese industrial companies jumped 22.8% in November from a year earlier to CNY638.5 billion, accelerating from October's 20.5% gain.
China is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.
Elsewhere on the Comex, gold for February delivery eased down 0.1% to trade at USD1,659.35 a troy ounce, while silver for March delivery was flat to trade at USD30.02 a troy ounce.
Volumes were expected to remain light, with year-end positioning and profit-taking driving flows. Lower-than-usual volumes could spark volatile trading, resulting in rapid changes in metal prices during the final weeks of the year.
