Copper Rises to 10-Month High as Economic Growth May Spur Use

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"Copper looks like it is going to keep going higher."

Copper prices rose to a 10-month high as signs of an improving economy buoyed speculation that metals demand will gain.

Japanese machinery orders in June advanced for the first time in four months, while French industrial production rose more than expected in the same month. Goldman Sachs Group Inc. raised its forecast for China's economic growth this year. Copper prices have almost doubled this year on speculation that the worst of the global recession has passed.

"You've got a lot of people thinking that demand will continue to climb, especially from China, as the global economy starts growing," said Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago. "Copper looks like it is going to keep going higher."

Copper for September delivery gained 1.8 cents, or 0.6%, to $2.8035 a pound at 11:36 a.m. on the Comex unit of the New York Mercantile Exchange. The metal earlier reached $2.8465, the highest price for a most-active contract since Oct. 1.

"All the economic data has been in line with the improving-global-outlook thesis," said Max Layton, an analyst at Macquarie Bank Ltd. in London. "Markets are continuing to factor in a pickup in demand."

The metal has soared this year as buying increased in China, which imported more than twice as much copper in the first half as a year earlier. The Asian nation is the world's biggest user of the commodity.

Short Positions

Hedge-fund managers and other large speculators decreased their net-short position, or bets prices will fall, in New York copper futures in the week ended Aug. 4, according to U.S. Commodity Futures Trading Commission data. Net-short positions fell 27% from a week earlier and are the smallest since September.

Metals prices are looking "frothy" after surging this year, and investors should reduce their holdings, according to Goldman Sachs JBWere Pty. Declines in global demand outside of China threaten the rally, according to the brokerage, an affiliate of Goldman Sachs Group.

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