Copper futures ended Monday’s session higher, recovering a bit following previous week’s losses as strong U.S. economic statistics and stimulus expectations outshined an increase in the US dollar.
On Monday, copper for September delivery added 1.3 percent to end at $2.148 a pound on the Comex. During the previous week, the commodity drops 4% on risk aversion.
On Monday, the commodity was supported by last Friday’s strong US jobs report.
Adding to the positive sentiment on Monday was an election victory by Japanese Prime Minister Shinzo Abe’s ruling coalition on Sunday, which increased the expectation that the country would start another stimulus program to bolster its economy.
The bullish momentum on Monday was sufficient to outshine an increasing US dollar that increases after the sentiment that the country’s economy is doing well. For dollar-denominated commodities, such as copper, a stronger greenback have a tendency to lower demand from foreign purchasers as it makes the metal more expensive for holders of other currencies.
Although Comex copper traded higher on Monday, London Metal Exchange copper finished a little lower. Following Monday’s advance, moving averages and technical indicators indicate that additional selling pressure could affect the commodity. On Monday, copper increased beyond its one month level of resistance. The next resistance is spotted at $2.259 per pound. While technical indicators are generally pointing towards sell, the fundamental picture for the commodity also stays weak.
The main concern for copper is the future demand from China, and with the country’s economy still on an unstable position, coupled with the fact that China has high levels of the commodity, this could put pressure on future imports.
On Tuesday, gold prices resisted for direction in thin European trading, as market participants awaited comments from a barrage of Fed officials later in the meeting to gain more clarity regarding the outlook on additional interest rate hikes.
On Tuesday, St. Louis Fed President James Bullard is scheduled to speak at 13:35GMT or 9:35AM ET at the Gateway Chapter of the National Association for Business Economics.
Fed Governor Daniel Tarullo is scheduled to give statements at 13:15GMT or 9:15AM ET, on shadow banking, whereas Minneapolis Fed President Neel Kashkari is anticipated to speak at 21:30GMT or 5:30PM ET about the economy and the role of the Federal Reserve System.
Gold for August delivery on the Comex division of the NYMEX plunged 60 cents or 0.05 percent to trade at $1,356.00 a troy ounce by 06:45GMT or 2:45AM ET.
A day before, gold shed $1.80 or 0.13 percent, as a strong rally in global equity markets reduced demand for gold.