Copper Futures Gain as Investors Buy Commodities and Sell US Dollar

Strategic Insights -

Copper futures experienced a surge in prices as investors sought to purchase commodities and divest from the US dollar. The metal's gain was bolstered by increasingly positive economic data, including a Purchasing Managers' Index in China marking the ninth consecutive month of expansion and a 0.1% increase in US light-vehicle sales in November. Copper, widely used in construction, automobiles, and electronics, often tracks industrial data. As concerns about the Dubai debt crisis eased, risk appetite increased, and the metal's price extended its highest point since September 2008.

Key Takeaways:

  • Copper futures gained 5.4 cents to settle at $3.2310 a pound on the Comex division of the New York Mercantile Exchange.
  • The metal's price hit $3.2380, its highest point since September 2008.
  • The ICE Futures U.S. Dollar Index was down 0.512 point at 74.367 a pound.
  • Sterling Smith, analyst with Country Hedging, cited news of China's Purchasing Managers' Index being 55.2 in November, marking the ninth straight month of expansion, as a factor in the metal's gain.
  • Ford reported a 0.1% increase in November US light-vehicle sales on higher car and crossover sales.
  • Copper often tracks industrial data due to its widespread use in construction, automobiles, and electronics.
  • Analysts noted that US data were generally positive, with October pending home sales jumping 31.8% from a year earlier and spending on construction in the US not falling in October as expected.
  • The Institute for Supply Management showed its manufacturing index for November slipping to 53.6, but noted "signs are still encouraging" for the manufacturing sector.
  • Market jitters eased as Dubai World announced it was in constructive talks with banks about restructuring nearly $26 billion in debt.

Statistics:

  • Copper futures increased by 5.4 cents to settle at $3.2310 a pound.
  • The ICE Futures U.S. Dollar Index was down 0.512 point at 74.367 a pound.
  • China's Purchasing Managers' Index was 55.2 in November, marking the ninth consecutive month of expansion.
  • Ford's November US light-vehicle sales increased by 0.1% on higher car and crossover sales.
  • October pending home sales jumped 31.8% from a year earlier.
  • Sp Spending on construction in the US didn't fall in October as expected.
  • The Institute for Supply Management's manufacturing index for November was 53.6.
  • Dubai World's debt is nearly $60 billion.
  • Copper inventories in London Metal Exchange-monitored warehouses rose 2,475 metric tons on Tuesday, leaving them at 441,000.
  • Comex inventory data showed a 2,570 short tons increase at 85,691 short tons.

Sources:

  • Dow Jones Commodities News via Comtex
  • Sterling Smith, analyst with Country Hedging
  • Ralph Preston, senior market analyst with Heritage West Financial
  • Edward Meir, analyst with MF Global
  • Matt Whittaker, Dow Jones Newswires
  • Dow Jones Newswires; 212-416-2139; matt.whittaker@dowjones.com
  • Dow Jones & Company, Inc.