Copper at 1-Month Top from Short Covering

Source:

"There's a bit of a short squeeze ahead of the G20 meeting."

Copper rallied to its loftiest level in nearly one month Friday, shedding earlier losses in sympathy with a late bounce on Wall Street, with New York prices gaining technical momentum through the $3.00 per lb level.

Copper for July delivery on the COMEX soared $0.09, or 3%, to end at $3.0955/lb.—its highest level on a closing basis since May 28.

"A technical breakout above $3.00 (per lb) is what it looks like," said Sterling Smith of Country Hedging in St. Paul, Minnesota.

"The dollar began to move back a little bit and equities came off their lows. . .that prompted a little bit of buying. When we popped up through the $3.00–$3.01 area, we started to find some stops; and I think we scared some people out of the market," he said.

On the London Metal Exchange, three-month copper ended up $65 at $6,760/ton. Gains were extended in afterhours business, pushing it up to $6,875.

Short covering was also seen on the LME, as investors covered ahead of a weekend G20 summit in Toronto.

"There's a bit of a short squeeze ahead of the G20 meeting," said Citi Analyst David Thurtell.

"It's at decent buying value on a risk/reward basis," he said, adding "there's a lot of bad news priced into the market."

Consumer sentiment in the U.S., the world's largest economy, rose in June to its highest since January 2008, while reports of job losses were down sharply from a year ago, a survey showed Friday.

"The consumer sentiment was OK," Sterling Smith said. "It probably did add a little bit of propulsion to this, but I don't think it was that much. The GDP number was kind of a disappointment, so when you weigh the two together, it's pretty neutral."

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