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Comex copper futures bounce to firm close

NEW YORK: After three days of closing lower, Comex copper futures managed to gain some support and end on a firm note.

Heavy fund selling kept prices down in early dealings but arbitrage buying coupled with continued Asian buying helped erase losses, according to traders.

March copper ended 0.30 cent higher at 84.45 cents a lb after trading between 83.10 and 84.55 cents. January ended 0.10 firmer at 83.75 cents, February rose 0.20 to 83.90 cents and May gained 0.25 to 85.40 cents.

"London arbitrage guys bought it at 83.50, pushed up to 83.70/80, touched off some light stops and just carried it through," said one Comex trader.

"Spreads are starting to go again with March-May, March-July, March-Sep. There's a lot of volume in that. Stops were hit at 83.15 and 83.10," he added.

After hitting an upside breakout point last week at 87.30, the recent jump in LME stocks just dampened sentiment in an already slightly overextended market but today's rebound bodes well for further upswings, said traders.

"This is good, this move here. Now if we get above here and get back above 85.00, we might see 86.00," said one trader.

In London, Asian buying came in to send prices up to a stronger close at $1,864 a tonne, up $11. Fund liquidation had been slowly prodding prices lower in early trading.

The 17,350-tonne jump in LME copper stocks on Monday spooked the market a bit, sending prices downward. With the exception of that stellar rise, traders said most people have readily been anticipating off warrant material being moved on warrant.

LME stocks were up for the fourth day in a row to 812,500 tonnes, up 5,050. LME stocks rose 2,375 tonnes on Wednesday, and 1,850 tonnes on Tuesday.

Chartists put nearby resistance at 85.00 cents, followed by 88.50 up to the 89.00-cent level for March delivery. Support nearby is at 84.30 cents, followed by 83.80 cents with strong support at 82.75/80 cents.

Final estimated volumes Thursday reached 14,000 contracts, compared with official volumes Wednesday of 16,447 contracts, and an official turnover of 20,910 contracts on Tuesday.

The nine-day relative strength index for March copper bounced in tandem with the price move to end at 33, compared with 26 at the close of business Wednesday.

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