Forexpros – Copper futures rallied to the highest level since mid-September on Tuesday, as stronger-than-expected Chinese economic data eased fears over a ‘hard landing’ in the world’s largest copper consumer.
On the Comex division of the New York Mercantile Exchange, copper futures for March delivery traded at USD3.753 a pound during European morning trade, surging 3.19%.
It earlier rallied by as much as 3.35% to trade at USD3.758 a pound, the highest since September 21.
Official data released earlier showed that China’s economy expanded at an annualized rate of 8.9% in the fourth quarter, slowing from the previous quarter’s 9.1% rate, but slightly better than expectations for an 8.8% increase.
While the data was better-than-expected, the nation’s economy grew at the slowest pace in more than two years and expanded less than 9% for the first time since mid-2009, fuelling speculation that Beijing was likely to ease monetary policy to stimulate growth.
China is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.
Weakness in the U.S. dollar also contributed to gains, as it makes the dollar-priced commodity cheaper for holders of other currencies. The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, was down 0.6% to trade at 81.16.
Markets largely shrugged off Standard & Poor’s decision to downgrade the triple-A rating of the euro zone’s bailout fund, the European Financial Stability Facility, by one notch late Monday.
The threat of a default by Greece continued, as talks aimed at negotiating a restructuring of the country’s debts remained deadlocked, amid disagreements over a bond swap with private creditors.
Meanwhile, Wall Street investment bank Morgan Stanley said in a report Monday that it remained bullish on copper, citing a global supply deficit. According to the bank, there would be a refined copper deficit of 300,000 tons in 2012, the third straight annual shortfall.
The bullish outlook comes after Goldman Sachs said copper “provided the best value opportunity relative to our view of fundamentals in 2012.”
Elsewhere on the Comex, gold for February delivery rallied 2.17% to trade at USD1,665.95 a troy ounce, while silver for March delivery jumped 3.35% to trade at USD30.51 a troy ounce.
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