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Copper Spikes 3% on Technical Momentum, Strong Chinese Economic Data

July 25, 2017 at 16:34 by Andrew Moran

Copper futures are surging more than 3% on Tuesday thanks to technical momentum and strong Chinese economic data. With traders worrying about supply-side issues and immense demand of the industrial metal from the world’s second-largest economy, copper prices are taking advantage, hitting a five-month high.

September copper futures rose $0.094, or 3.44%, to $2.8305 per pound at 16:19 GMT on Tuesday. The red metal is trading at its highest level since February and is continuing its impressive 2017 as it has climbed 13% year-to-date.

Over the past week, a lot of supply data and reports have impacted the copper industry. Although labor action has been averted in Chile, an estimated 5,000 workers will be striking at the Grasberg copper mine in Indonesia, extending their labor activity for the fourth consecutive month.

Meanwhile, there are reports of disruptions to copper shipments from Canada and Chile, which could have significant effects on global supplies in the second half of the year.

Investors are celebrating new data from Beijing that found China’s copper imports increased in June month-to-month. Also, the International Monetary Fund (IMF) revised its economic forecast for China by 0.1% to 6.7%, a development that would likely increase copper demand by the world’s biggest consumer of the red metal.

A weaker dollar is further contributing to rising copper prices. The US dollar shed 0.05% as the greenback is suffering from political turmoil in Washington. A lower dollar is good for commodities like copper because it makes it cheaper for foreign investors to purchase. The markets will be bracing for any details about any upcoming hikes to interest rates as the Federal Reserve ends its two-day policy meeting on Wednesday.

Other metals are a mixed bag on Tuesday. August gold futures tumbled $3.80, or 0.30%, to $1,250.50 per ounce. September silver futures jumped $0.01, or 0.07%, to $16.45 an ounce.

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