Copper Futures Rise on Economic Optimism and Short Covering

Strategic Insights -

Copper futures surged on Tuesday, driven by optimism about the economy, stronger pending home sales, and short covering encouraged by chart-based factors. Despite the gains, copper remains within its recent consolidation range. Analysts attributed the rise to anticipation of stimulus proposals from Washington, which has led to a brief boost in commodities.

Key Takeaways:

  • Copper futures rose 9.10 cents to settle at $1.5220 per pound on the Comex division of the New York Mercantile Exchange.
  • The increase was largely driven by optimism about the economy, including stronger pending home sales, which rose 6.3% to 87.7 in December.
  • Analysts cited chart-based factors, such as bullish candlestick formations and renewed enthusiasm about potential demand for China.
  • Short covering also appeared to be taking place, with some traders opting to cover positions as the market continued to rise.
  • London Metal Exchange warehouse stocks rose 4,100 metric tons, leaving them at 495,300.
  • Antofagasta PLC, a Chilean copper miner, reported an 11.6% rise in 2008 production but forecast a decline this year due to scaling back operations and lower ore grades.
  • Copper remains within its recent consolidation range of roughly $1.40 to $1.60 a pound.

Statistics:

  • Copper futures rose 9.10 cents to settle at $1.5220 per pound.
  • Pending home sales rose 6.3% to 87.7 in December.
  • London Metal Exchange warehouse stocks rose 4,100 metric tons.
  • Antofagasta PLC reported an 11.6% rise in 2008 production.
  • Copper is within its recent consolidation range of roughly $1.40 to $1.60 a pound.

Sources:

  • Dow Jones Commodities News via Comtex
  • MF Global
  • optionsXpress
  • RBC Capital Markets
  • MarketClub.com
  • Dow Jones Newswires