Copper Futures Close Higher on Short Covering and Gold's Rally

Strategic Insights -

Copper futures closed higher on Friday as investors continued to buy on the coattails of gold's surge, despite a dismal global economy. The March futures hit a three-week low early in the day, but recovered to close at $1.4720 per pound, up 7.60 cents from the previous day. The rally in copper was attributed to short covering and the strong gain in gold futures, with experts citing a consolidation pattern in copper that may persist in the near future.

Key Takeaways:

  • Copper futures closed higher on Friday, with the March futures rising 7.60 cents to settle at $1.4720 per pound on the Comex division of the New York Mercantile Exchange.
  • The rally in copper was attributed to short covering and the strong gain in gold futures, with the roughly $40 gain in gold playing a significant role.
  • Michael Gross, a broker and futures analyst with OptionSellers.com, stated that copper is in a consolidation pattern and will likely remain there for a while, citing global demand as dismal.
  • Sterling Smith, vice president with FuturesOne, noted that the stock market's action is helping fortify copper, with the March S&P 500 futures testing but holding the 800 level for the third time in four trading days.
  • Smith added that copper's uptick might be creating some nervousness among funds that are heavily short, as shown by weekly Commodity Futures Trading commission data.
  • Chart resistance for copper is set at $1.55 to $1.556 a pound, with some minor psychological resistance ahead of this around $1.50.

Statistics:

  • Copper futures rose 7.60 cents to settle at $1.4720 per pound on the Comex division of the New York Mercantile Exchange.
  • The March S&P 500 futures tested but held the 800 level for the third time in four trading days.
  • Gold futures gained roughly $40 at the time of copper's close.
  • Commodity Futures Trading commission data showed that funds are heavily short in copper, which may lead to further short covering.
  • Inventory levels for copper in London Metal Exchange warehouses rose 2,175 metric tons to 424,625.

Sources:

  • Dow Jones Commodities News via Comtex
  • Comtex
  • Dow Jones Newswires
  • OptionSellers.com
  • FuturesOne
  • Allen Sykora, Dow Jones Newswires