Copper futures advanced for the first time in three days as the dollar fell and new home sales surged in the U.S., the world’s biggest metals user after China.
Purchases of new homes in August jumped to a seven-year high, boosting the demand outlook for copper, which is used in pipes and wiring. The Bloomberg Dollar Spot Index dropped for the first time in a week amid speculation that the Federal Reserve will wait longer before raising interest rates. Investors tend to snub commodities when rates rise because the raw materials don’t provide yields, unlike competing assets. A stronger dollar cuts the appeal of metals as alternative assets.
“Housing starts came out a little stronger than expected, so if there’s a tiny bit more demand for copper in residential construction in the U.S., it helps out a little bit,” Mike Dragosits, a senior commodity strategist at TD Securities in Toronto, said in a telephone interview. “There also might be some worries lowering the U.S. dollar, potentially helping out the metals.”
Copper futures for December delivery rose 0.3 percent to settle at $2.3025 a pound at 1:18 p.m. on the Comex in New York. Prices earlier fell as much as 1 percent.
On the London Metal exchange, aluminum, nickel, tin and zinc climbed. Copper and lead dropped.