Copper soars to 4-month high on US economic hope
Copper hit a four-month high Wednesday after the US Federal Reserve pledged to hold interest rates to near zero until the end of 2014.
Three-month copper on the London Metals Exchange was bid at $8,455.25, its highest level since Sept. 19.
The surprising Fed announcement – indicating the central bank is still worried about the country’s economic growth – also sent gold soaring in afternoon trade.
The gains in commodity prices were a direct result of the fall in the US dollar after the Fed decision. A weaker dollar boosts dollar-denominated copper and other commodities by making the futures appear cheaper for buyers using other currencies.
Reuters reported the gains were “underpinned by a flurry of technical buying, signs of a modest U.S. economic recovery and data showing falling inventory levels of the metal,” along with three U.S. manufacturers reporting better-than-expected profits.
And even though home sales fell, which normally triggers a price drop for copper, an important building material for residential and commercial construction, “the reports did not change perceptions that a nascent recovery is under way in the country’s housing market,” Reuters said.
Andrew Topf
Three-month copper on the London Metals Exchange was bid at $8,455.25, its highest level since Sept. 19.
The surprising Fed announcement – indicating the central bank is still worried about the country’s economic growth – also sent gold soaring in afternoon trade.
The gains in commodity prices were a direct result of the fall in the US dollar after the Fed decision. A weaker dollar boosts dollar-denominated copper and other commodities by making the futures appear cheaper for buyers using other currencies.
Reuters reported the gains were “underpinned by a flurry of technical buying, signs of a modest U.S. economic recovery and data showing falling inventory levels of the metal,” along with three U.S. manufacturers reporting better-than-expected profits.
And even though home sales fell, which normally triggers a price drop for copper, an important building material for residential and commercial construction, “the reports did not change perceptions that a nascent recovery is under way in the country’s housing market,” Reuters said.
Andrew Topf
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