Forexpros – Copper futures advanced on Tuesday, hovering close to the previous session’s two-week high as the U.S. dollar came under pressure ahead of a meeting of euro zone finance ministers in Brussels later in the day.
On the Comex division of the New York Mercantile Exchange, copper futures for March delivery traded at USD3.385 a pound during European morning trade, gaining 0.41%.
It earlier rose by as much as 0.5% to trade at a daily high of USD3.388 a pound. Prices climbed to USD3.415 on Monday, the highest price since November 18.
Finance ministers from the 17 European Union member states were to meet in Brussels later in the day to discuss the region’s ongoing financial crisis and ways to boost the firepower of the European Financial Stability Facility. The ministers were also expected to sign off on Greece’s next tranche of financial aid.
However, reports in French media outlets saying that ratings agency Standard & Poor’s could downgrade France’s triple-A rating outlook to negative within days limited gains.
Investors also remained cautious ahead of an Italian bond auction, in what was being seen as a key test of investor confidence in the country’s debt.
The country’s ten-year yields climbed to 7.24% ahead of the auction, a level widely viewed as unsustainable in the long term, despite buying from the European Central Bank.
Europe as a region is second after China in global demand for the industrial metal and worries over its debt crisis have kept copper prices under pressure in recent weeks.
Weakness in the U.S. dollar contributed to gains. The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, retreated 0.67% to trade at 78.86.
A weaker dollar boosts demand for raw materials as an alternative investment and makes dollar-priced commodities cheaper for holders of other currencies.
Meanwhile, BHP Billiton Chief Executive Marius Kloppers said earlier that customers are finding it harder to access credit and some have seen terms of trade finance tighten.
Kloppers added that the euro zone’s debt crisis has had a negative affect on the region’s banks, traditionally the main providers of trade finance to Asia.
However, Kloppers remained optimistic on the long-term demand outlook for the red metal, as industrialization and urbanization continues in China, India and other emerging economies.
Elsewhere on the Comex, gold for February delivery rose 0.25% to trade at USD1,718.75 a troy ounce, while silver for March delivery slumped 0.7% to trade at USD32.01 a troy ounce.
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