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Comex copper ends higher as buyers enter the fray

NEW YORK: Comex copper futures bounced back after a day-and-a-half of selling pressure to close the day's session on an upward note, once the post-Y2K selling was washed out.

A mix of fund and trade buying came in Wednesday to give prices a boost higher with traders and analysts anticipating further upward swings.

The active March copper ended up 0.85 cent at 85.65 cents a lb, trading between 83.80 and 85.90 cents. Spot January also made inroads to end at 84.75 cents a lb, up 0.95 cent.

"We steadied between 85.50 and 85.70 and there's resistance building up around the 86.40/60 cent level," said one Comex trader. "It looks like they started consolidating and getting out of the short-covering from last week when it was overbought," he added.

The market rallied from its 83.30-cent settlement on December 21 up to 86.30 cents on December 30 before selling pressure coaxed prices lower after Y2K came and went without hitting any snags.

"I think (the market) was hurt by a little post-Y2K selling and then the plunge yesterday in global equities. But the minute it looked like they were going to steady up, (prices) steadied up and I think today was a very solid session for copper," said William O'Neill, commodity analyst with Merrill Lynch.

Concern over a pending interest rate hike by the US Federal Reserve is keeping the market somewhat skittish with some participants opting to sit on the sidelines until a Fed decision washes out. The Fed is scheduled to meet on February 1 and 2.

London trading initially moved lower before gaining some ground in later dealings and closing the afternoon kerb unchanged at $1,864 a tonne. The three-months price was last indicated at $1,872/76 a tonne.

"As the market has settled somewhat, people are realising that the supply-demand balance is quite favourable," said Thomas McNamara of CIBC World Markets. "You're starting to see good support for the prices and I think they'll start to trade up again."

Final volumes were estimated at 11,000 contracts, compared with final official volumes on Tuesday which reached 13,851 contracts. LME warehouse stocks were down 1,450 tonnes at 788,775 tonnes in Wednesday's report. Comex inventories on Tuesday were up 695 short tons at 92,294 tons.

The nine-day relative strength index for March copper moved higher after the afternoon buying spree to end at 60, compared with Tuesday's close of 48.

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