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Comex copper ends off as longs snip rally

NEW YORK: Comex copper futures fell Thursday, toppled by large market long position and retracing almost half of Wednesday's rally amid reluctance to attempt more new highs before the US holiday weekend.

The market will be closed Monday in observance of Martin Luther King, Jr. Day. It will conduct an abbreviated session which ends Friday.

"It was a little bit of profit taking. We overdid ourselves a little bit on the upside," said Comex local John Hanemann.

"You've got a half day tomorrow here. So they'll take advantage of doing some arbitrage," he said. "The arbitrage people in London sold it all the way up and they're the stablizing force today. Every time its dipping down the phones from London are ringing."

Benchmark March ended down 0.95 cent at 85.65 cents a lb after trading 85.50 to 86.70 cents. Spot January lost 1.00 cent to 84.90 cents and February fell the same to 85.20 cents.

Fund buying on Wednesday propelled the March contract up 2.25 cents, exceeding old highs at 86.20-86.50 cents and removing stop-loss buy orders at 85.40 on the way up to a new intraday peak of 86.95 cents.

Indicating ballooning length in the copper market, open interest was up 5,193 contracts on Wednesday, described as a large change for copper.

LME copper is expected to re-test Wednesday's highs above $1,900, then prices will be on course to test more important chart resistance between $1,910 and $1,920. The close above the $1,880 break-out point was seen as positive.

Last business was at $1,882 a tonne, unchanged from Wednesday afternoon's kerb close.

"I think the market is getting near a fair price but it will be supported by good demand on any retracement," said James Steel, analyst at Refco Inc, citing "a very good rebirth of demand in Japan, Asian economies and continental europe, with the big exception being, I guess, Germany."

Final Comex copper volume Thursday was estimated at 18,000 contracts, compared with Wednesday's official final turnover of 18,212 contracts.

The nine-day relative strength index for March copper ended Thursday at 54, down from a nearly overbought at 69 on Wednesday.

Technical analysts usually interpret an RSI reading at 70 or higher as indicating overbought conditions and a reading of 30 or below as oversold.-Reuters