Forexpros – Copper futures advanced on Tuesday, regaining strength after hitting a one-month low during the previous session as fears over a U.S. debt downgrade eased, while hopes of resilient demand from top consumer China also lent support.
On the Comex division of the New York Mercantile Exchange, copper futures for December delivery traded at USD3.357 a pound during European morning trade, climbing 1.63%.
It earlier rose by as much as 1.85% to trade at a daily high of USD3.373 a pound.
Copper’s gains came as the dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, declined 0.2% to trade at 78.31.
A weaker dollar boosts demand for raw materials as an alternative investment and makes dollar-priced commodities cheaper for holders of other currencies.
Market sentiment improved after ratings agency Fitch said late Monday that the failure of a U.S. congressional “super committee” to agree on a package of measures to cut the U.S. deficit over the next 10 years was likely to lead to a revision of the rating outlook to Negative, rather than a downgrade.
Fellow ratings agency S&P, which in August stripped the U.S. of its triple A rating, also said that the breakdown in talks didn’t merit another downgrade because the inaction will trigger automatic spending cuts of USD1.2 trillion.
Meanwhile, some bargain buying also lent support after copper prices tumbled nearly 2.2% on Monday to settle at the lowest price since October 24 as fears over debt levels in the U.S. and the euro zone prompted investors to shun riskier assets.
The sharp decline triggered some bargain buying from traders reluctant to bet that prices would fall further amid a favorable demand outlook from China.
Chinese customs data released earlier showed that the nation’s refined copper imports rose for a fifth month in October, climbing to 295,341 metric tons, up 6.7% from September and 42% higher than a year ago.
China is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.
Elsewhere on the Comex, gold for December delivery rose 0.85% to trade at USD1,693.05 a troy ounce, while silver for December delivery jumped 1.55% to trade at USD31.60 a troy ounce.
Forexpros
