Comex copper rockets to new high, Asian buying robust

The Comex copper price set a fresh high amid persistent Asian buying and spillover optimism that the US economy will transition smoothly to a new presidency.

Copper for December settlement on the Comex division of the New York Mercantile Exchange rocketed 14.7 cents or 5.8% to $2.6980 per pound. The contract has gained 19.3% this week and is now trading at the highest point since June 10, 2015.

Comex gold for December settlement slipped $8.90 or 0.7% to $1,257.60 per oz. Trade has ranged from $1,250.40 to $1,265.0.

Copper has found favour among CTAs and algorithmic traders, particularly from China. There have also been reports of producers closing their short positions and using these higher prices to hedge.

Liquidity is also shallow after LMESelect shutdown and traders scrambled to telephones to complete transaction.

“It’s nuts, apparently select crashed earlier in the day and I think that killed liquidity so the telephone trading probable pushed the prices up higher than it would otherwise have gone,” Metal Bulletin analyst William Adams said. “Before that, it looked like the funds were buying out of China.”

Here in the US, a stronger dollar is one of few obstacles preventing a further run-up. The greenback is stronger due to roughly 80% of market participants expecting the Federal Reserve to lift rates next month, with the odds improving from 50% in the immediate wake of Donald Trump’s election.

A massive liquidation across a majority of markets occurred once Trump was expected to become the 45th president, but Trump’s promise to spend massively to overhaul America’s crumbling infrastructure will boost demand for metals, market observers reckoned. Still, there is no fundamental foundation for the rise, making the metals vulnerable to a correction.

“In addition to fund buying, copper’s move seems attributable to perceptions of increased infrastructure spending that an incoming Trump presidency could usher in,” INTL FCStone analyst Edward Meir said. “A new round of expected fiscal expansion is being looked at as boosting growth given that zero-rate rate policies pursued by most of the world’s central banks have largely run their course.”

US data due later on Friday includes preliminary UoM consumer sentiment and preliminary UoM inflation sentiment.

Meanwhile in European markets, Germany’s DAX gained 0.5% and France’s CAC-40 dipped 0.6%. The dollar strengthened by 0.2% to 1.0876 against the euro.

In other commodities, light sweet crude (WTI) oil futures on the Nymex slipped 63 cents or 1.5% to 44.03 per barrel, while Comex silver for December settlement was recently trading at $18.615 per oz., down 12.2 cents.

(Editing by Tom Jennemann)

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