Copper rises marginally higher

Prices rise on Fed's interest rate speculation

Copper prices ended higher for first time in three sessions on Monday, 09 August 2010. Prices rose on speculation that the Federal Reserve will extend efforts to shore up the U.S. economy.



At USA, copper futures for September delivery ended higher by 1 cent (0.3%) at $3.35 a pound on Monday. Copper gained 1% last week. For the month of July, copper ended higher by 12% as concerns about a slowdown in the global recovery abated, pushing the red metal to its best month since April 2009.

Before this, for second quarter, copper dropped 16%. Copper gained about 6% for the first quarter, buoyed by data from the U.S. and other countries reinforced expectations that the global economic recovery was on track. On a year to date basis, in 2010, copper is higher by 2.8%. On a yearly basis, copper has gained 21%.

On Monday, at LME, copper for delivery in three months ended higher by $55 (0.7%) at $7,425. Prices had crossed the $8,000 mark for first time since 2008 on 6 April. On 3 July, 2008, prices had touched an all time intra day high of $8,940. Copper ended FY 2009 higher by 140%.

Inventories tracked by the London Metal Exchange fell today to 410,475 metric tons. They have dropped 18% this year.

On Monday, US stocks spent the session in the green, but there was never really a leader among them. Instead, gains were broad and varied. Many point to tomorrow's FOMC decision as a primary reason that traders opted to stay on the sidelines. The consensus is that the FOMC will keep its target interest rate in a range of 0.00% to 0.25%, but many are concerned that the Fed might change the verbiage in its directive.

In the currency market on Monday, the dollar index, which weighs the strength of the dollar against a basket of six other currencies, rose by 0.4%.

The U.S. buys about 13% of the 17 million metric tons of copper sold annually and China buys about 20%. Copper fell for three months in a row through June on concern about efforts to curb growth in China, the world's biggest user of the metal.

Copper ended substantially higher last year on expectations of revived global economic growth along with a decline in the dollar. The dollar index had dropped almost 4.2% last year. The metal was also pushed higher by record first-half imports to China, the world's largest user.

At the MCX, copper prices for August delivery ended higher by Rs 0.1 (0.03%) at Rs 342.3/Kg. Prices rose to a high of Rs 344.95/Kg and fell to a low of Rs 341.15/Kg.

Among other metals traded in the LME on Monday, lead ended 0.5% higher at $2,208.45 a ton and zinc ended 1.1% higher at $2,142 a ton. Nickel ended 0.8% higher at $22,265. Aluminum ended 0.3% lower at $2,156 a ton.