Copper Rises on Speculation Fed May Expand Stimulus to Boost U.S. Economy
Copper prices rose for the first time in three sessions on speculation that the Federal Reserve will extend efforts to shore up the U.S. economy.
The Standard & Poor’s 500 Index climbed as much as 0.5 percent on bets the U.S. central bank will introduce measures to stimulate growth during a policy meeting tomorrow. Copper prices more than doubled in 2009 as government spending and record-low borrowing costs helped revive the global economy.
“The continued optimism stems from hope that the Fed in its meeting tomorrow will further ease monetary policy,” Alex Heath, the head of industrial-metals trading at Royal Bank of Canada Europe Ltd. in London, said in a report.
Copper futures for September delivery advanced 1.1 cent, or 0.3 percent, to close at $3.354 a pound at 1:19 p.m. on the Comex in New York. The metal gained 1 percent last week.
“Copper is one of our favorite commodities,” John Stephenson, who helps manage C$1.65 billion ($1.59 billion) at First Asset Investment Management Inc., said in an interview in New York last week. “China will be the main driver. Even as we see slower growth in North America and Europe, growth from other parts of the world is still going to be strong.”
The biggest gains for the metal may be in 2011 as prices stagnate for the rest of this year, said Stephenson, the author of “The Little Book of Commodity Investing.”
Prices may “struggle” on signs of a sluggish U.S. economy, said Matthew Zeman, a trader at LaSalle Future Group in Chicago. Goldman Sachs Group Inc. cut its U.S. growth forecast last week. Nonfarm U.S. payrolls fell by 131,000 in July, a government report showed on Aug. 6.
“Copper is nearing the top of its range,” Zeman said. “The jobs number was disappointing, and that’s going to weigh on things for the foreseeable future.”
Inventories tracked by the London Metal Exchange fell today to 410,475 metric tons, the lowest level since Nov. 17. They have dropped 18 percent this year.
Falling stockpiles suggest “that stronger-than-expected manufacturing activity is making headway into sizable inventory positions,” Macquarie Bank said in a report.
Copper for delivery in three months rose $55, or 0.7 percent, to $7,425 a ton ($3.37 a pound) on the LME.
Nickel, tin, zinc and lead prices also gained in London. Aluminum dropped.
To contact the reporters on the story: Anna Stablum in London at astablum@bloomberg.net; Millie Munshi in New York at mmunshi@bloomberg.net.
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