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Strong Fundamentals Help Copper Futures Spike 2%

June 21, 2017 at 16:55 by Andrew Moran

Copper futures rose as much as 2% on Wednesday as fundamentals appear to be strong. After sliding to a two-week low, investors have been undergoing some bargain buying of the industrial metal. A tumbling greenback also contributed to the red metal’s gains.

July copper futures climbed $0.048, or 1.88%, to $2.602 per pound at 16:37 GMT on Wednesday. Copper prices had slipped to a two-week low at the start of the trading session but have since pared their losses.

The earlier decline prompted investors to initiate some bargain buying. With copper’s fundamentals appearing to be robust, commodities traders took advantage of the lower prices. Investors also see that there will likely be a deficit later this year as supply concerns have yet to be resolved.

At the beginning of the year, strikes at the world’s two biggest mines – Escondida and Grasberg – impacted supplies and sent the industrial metal soaring to as high as $2.82. Copper has since traded lower and has advanced just 3% year-to-date.

Copper was further supported by a falling US dollar as the greenback slipped 0.04%. A lower US dollar is good for dollar-denominated commodities like copper because it makes it cheaper for foreign investors to purchase.

Last week, copper made business headlines when a report suggested electric vehicles will increase demand. Copper jumped 1%, but was unable to maintain the momentum the following trading day.

Copper investors will now be awaiting for an announcement from US President Donald Trump and his $1 trillion infrastructure spending plan. The administration is expected to release details of its efforts to spend $1 trillion over 10 years on infrastructure, an initiative that would boost demand for copper. Other governments, like the UK and Canada, were also expected to launch infrastructure endeavors this year, but any strategies have yet to be publicly announced.

Other metals are seesawing back and forth on Wednesday. August gold futures rose $2.10, or 0.17%, to $1,245.60 per ounce. July silver futures dipped $0.04, or 0.29%, to $16.37 an ounce.

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