Wednesday 5 August 2009

BASE METALS: Comex Copper Extends Rally On Technical Momentum

NEW YORK (Dow Jones)--Copper futures extended their 10-month high for the fourth consecutive session Wednesday on a weakening U.S. dollar, continuing economic optimism and technical buying amid the metal's strong recent advances.

September copper rose 1.65 cents to settle at $2.8120 a pound on the Comex division of the New York Mercantile Exchange. The contract extended its highest point since Oct. 1 to $2.8385.

Carryover fund buying boosted the metal, with the purchases most likely technical in nature, said Patrick Donnelly, a broker with Peak Trading Group.

Copper rose in large part on continuing technical strength, said Ralph Preston, senior market analyst with Heritage West Financial.

"This market is being guided by the momentum at the moment," Preston said. "It's acting as a forward-looking indicator for optimism on the economy."

That includes optimism about a "Cash for Clunkers" extension and hopes the Chinese economy may be stronger than previously thought, said Sterling Smith, market analyst with Country Hedging.

A lower dollar also supported the metal Wednesday, Smith said, adding that price charts also look strong.

"We have a very good technical picture," he said.

The metal has been underpinned by U.S. dollar weakness and constructive U.S. and Chinese economic data in recent days, a trader said.

Shortly after copper closed, the ICE Futures U.S. dollar index was down more than 0.27%.

New investment-type money has entered the market lately, the trader said.

"I'm not sure if we can stay at this level. We might see a correction," he said. "But the sentiment is certainly bullish at the moment."

Inventories of copper stored in London Metal Exchange warehouses fell 800 metric tons Wednesday, leaving them at 285,100. The most recent Comex inventory data, released late Tuesday afternoon, were down 166 short tons at 54,580 short tons.

Copper settlements (ranges include electronic and pit trading):
Aug $2.8065; up 1.75 cents; Range $2.7900-$2.8300
Sep $2.8120; up 1.65 cents; Range $2.7490-$2.8385

-By Matt Whittaker, Dow Jones Newswires; 212-416-2139;

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(END) Dow Jones Newswires

August 05, 2009 13:46 ET (17:46 GMT)

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