Copper hits 6-week high, as China is back from holidays; gold underpinned by Fed

Copper hits 6-week high, as China is back from holidays; gold underpinned by Fed

26 February 2015, 12:12
News
0
269

On Thursday copper prices rose to a six-week highs, as China market returned to business following a week-long holiday due to the Lunar New Year. The Asian nation is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.

On the Comex division of the New York Mercantile Exchange, copper for May delivery jumped 6.0 cents, or 2.26%, to trade at $2.703 a pound during European morning hours after hitting an intraday high of $2.705, the most since January 13.

Yesterday copper rose 0.4 cents, or 0.15%, to settle at $2.643. Futures were likely to find support at the $2.616, the low from February 25, and resistance at $2.729, the high from January 13.

Data issued yesterday indicated that the preliminary reading of China’s HSBC manufacturing index rose to 50.1 in February, just above the 50.0-point level that separates growth from a contraction on a monthly basis. Copper traders consider shifts in the HSBC PMI an indicator of China's copper demand, as the industrial metal is widely used by the sector.

Gold futures for April delivery jumped $16.50, or 1.37%, to trade at $1,218.00 a troy ounce, while silver futures for May delivery rallied 36.9 cents, or 2.24% to trade at $16.84 an ounce.

Gold was boosted as investors digested Janet Yellen's testimony. Federal Reserve Chair said Tuesday that it was “unlikely” that economic conditions would warrant an interest rate increase for “at least the next couple of FOMC meetings”.

She also commented that if the economy keeps improving as the Fed expects it will modify its forward guidance, but emphasized that a modification of its language should not be read as indicating that a rate hike would automatically happen within a number of meetings.

Yellen reiterated this message in a second day of testimony to the Financial Services Committee, saying that wage growth and inflation must rise before the bank can hike rates, despite signs of improvement in the labor market.

Later in the day, investors were looking ahead to U.S. data on jobless claims, durable goods orders and inflation for further indications on the strength of the economy.

Share it with friends: