Copper Extends Gains on U.S. Home Sales Report
Source: Bloomberg, Claudia Carpenter (1/26/11)
"The easy trade that some people expected isn't quite there right now."
U.S. new-home sales gained to an annual rate of 329,000 in December from 280,000 in November, the Commerce Department said. The Fed has kept borrowing costs near zero since December 2008, reviving growth since the third quarter of 2009.
"There are signs of recovery in the U.S.," said James Roberts, Sucden Financial broker, one of 12 trading companies on the floor of the LME.
Copper for March delivery gained 0.8 % to $4.26/lb. by 12:47 p.m. on the Comex in New York.
New-home sales climbed 18%, exceeding the 3.5% median estimate of economists surveyed by Bloomberg. The jump was the biggest since 1992, and was led by a record 72% surge in the West.
Copper in London has traded in about a $550 range this year from the high of $9,781/ton on Jan. 19 to yesterday's low of $9,234.85 as developing countries like China—the world's largest copper buyer—took steps to control growth to contain inflation while the U.S. and other developed countries maintained government spending to boost economies. The Fed is scheduled to report on interest rates at 2:15 p.m. in Washington.
Prices in New York are still down 4.2% this year.
"The easy trade that some people expected isn't quite there right now," Roberts said. "As long as we stay within the range, I think that's enough. Maybe the expectation is at some point China will come back."