IV:Copper jumps 1% to hit highest since June on economic optimism
Investing.com - Copper futures rallied to the highest level since June on Tuesday, amid growing optimism over the strength of the global economy.
Copper is sensitive to the economic growth outlook because of its widespread uses across industries.
On the Comex division of the New York Mercantile Exchange, copper futures for September delivery traded at USD3.339 a pound during European morning trade, up 1.1%.
Nymex copper prices hit a session high of USD3.343 a pound earlier, the strongest level since June 6.
Copper prices were likely to find support at USD3.174 a pound, the low from August 8 and resistance at USD3.369 a pound, the high from June 6.
The September contract settled down 0.1% at USD3.303 a pound on Monday.
Copper futures were higher after data showed that German economic sentiment improved to a five-month high in August.
The ZEW Centre for Economic Research said that its index of German economic sentiment rose by 5.7 points to hit a five-month high of 42.0 in August from July’s reading of 36.3.
Analysts had expected the index to rise by 3.7 points to 40.0 in August.
Meanwhile, the index of euro zone economic sentiment improved to 44.0 in August, the highest reading since April 2010 and up from 32.8 in July.
Economists had expected euro zone economic sentiment to rise to 37.4 this month.
A separate report showed that industrial production in the euro zone rose by a seasonally adjusted 0.7% in June, broadly in line with expectations for a 0.8% gain, after falling by 0.2% in May.
Europe as a region is third in global demand for the industrial metal.
Appetite for the red metal remained supported amid receding concerns over a slowdown in China’s economy.
China is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.
Market players now looked ahead to U.S. data on retail sales later in the day, as well as reports on inflation, industrial production, housing starts and consumer confidence later in the week.
Investors have closely been looking out for U.S. data reports recently to gauge if they will strengthen or weaken the case for the Fed to reduce its bond purchases.
Any improvement in the U.S. economy was likely to reinforce the view that the central bank will begin to taper its bond purchase program in the coming months.
The Fed’s stimulus program is viewed by many investors as a key driver in boosting the price of commodities as it tends to depress the value of the dollar.
Elsewhere on the Comex, gold for December delivery added 0.1% to trade at USD1,335.20 a troy ounce, while silver for September delivery rallied 1.35% to trade at USD21.62 a troy ounce.
Moves in the gold and silver price this year have largely tracked shifting expectations as to whether the U.S. central bank would end its bond-buying program sooner-than-expected.
