Copper rallied as some investors deemed a drop to a 44-month low to be excessive amid signs of a resilient economic recovery in the U.S., the world’s second-biggest consumer.
The metal has lost 12 percent this year on concern that slackening expansions in the U.S. and China will curb demand. While growth cooled amid “adverse weather” this winter, there is “sufficient underlying strength” in the American economy to support an improving job market, the Federal Reserve said today. Copper’s 14-day relative strength index was below 30 for eight straight sessions through yesterday, a signal to some analysts that the commodity is poised for a rebound.
“The market has been oversold, and got down to an important support level,” Frank Lesh, a trader at FuturePath Trading LLC in Chicago, said in a telephone interview. “It’s really just more of a corrective move. We’re also seeing some bargain-hunters.”
Copper futures for May delivery gained 1.2 percent to settle at $2.987 a pound on the Comex in New York at 1:20 p.m. Prices rebounded after touching $2.877, the lowest since July 2010.
On the London Metal Exchange, copper for delivery in three months gained 1.1 percent to $6,553 a metric ton ($2.97 a pound), after declining to $6,321, the lowest since July 1, 2010. Aluminum, zinc, lead, nickel and tin also advanced.
China is the biggest copper consumer.