Copper futures rose, extending the longest rally in seven weeks, on signs of recovery in the U.S. housing market and prospects for higher demand in China, the world’s largest consumer of industrial metals.
Building permits, a proxy for future construction, were the highest in May since September 2008, and construction of single-family houses gained, U.S. data showed today. China’s economy may be improving in June on measures to support growth, Commerce Minister Chen Deming said. The dollar fell the most in seven months against a basket of currencies, boosting the appeal of commodities as alternative assets.
“Housing permits rose, and the idea is circulating now that China’s economy is going to pick up,” Sterling Smith, a commodity analyst at Citigroup Inc.’s institutional client group in Chicago, said in a telephone interview. “The dollar broke lower, and that also helped push things along.”
Copper futures for September delivery rose 1.1 percent to settle at $3.441 a pound at 1:23 p.m. on the Comex in New York. The price climbed for fifth straight session, the longest rally since May 1.
Construction generates more than 40 percent of U.S. demand for copper, used in pipes and wiring, according to the Copper Development Association. Confidence among U.S. homebuilders climbed in June to a five-year high, based on the National Association of Home Builders/Wells Fargo index released yesterday.
“Evidence continues to mount that the U.S. new-home industry has entered a new growth cycle,” Michael Shaoul, the New York-based chairman of Marketfield Asset Management, said in an e-mail.
The Federal Reserve’s Open Market Committee, which sets the course of central bank policy, begins a two-day meeting today to decide whether more monetary stimulus is needed to boost growth.
On the London Metal Exchange, copper for delivery in three months rose 1.3 percent to $7,609 a metric ton ($3.45 a pound).
Nickel, zinc, tin and lead also gained on the LME, while aluminum dropped.