Copper Hits Two-Year High

By David Hodari Features Dow Jones Newswires

Copper prices continued to push higher Monday, reaching fresh two-year highs after an official gauge of manufacturing activity in China came in below expectations but remained in expansionary territory.

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The price of copper rose 0.87% to $6,400.50 a ton in midmorning trade in London.

Gold prices, meanwhile, slipped 0.20% to $1,266.68 a troy ounce, as the U.S. dollar edged up after recent pressure.

Copper's Monday gains brought the metal's on-the-week advance to more than 6%, with the Chinese purchasing-managers' index adding to the multiple factors which led to last week's sharp price increase.

Increased Chinese growth forecasts from the International Monetary Fund last Monday were later complemented by Chinese government remarks about the possible curtailment of scrap copper imports to give the metal its best weekly performance in five months.

"Those gains are continuing across the board in metals this morning, thanks to those solid Chinese PMI figures and it falls into the same story as the IMF's adjusted Chinese [growth] forecasts last Monday," said Bjarne Schieldrop, SEB Markets's chief commodities analyst.

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While China's manufacturing PMI metric at 51.4 was slightly lower than the consensus estimate of 51.6 according to FXStreet.com, that still "showed that factory activity in the country continued to expand," said ING in a morning note.

Still, market participants were handed a note of caution when Commodity Futures Trading Commission data showed that last week's copper gains were driven by speculative activity rather than any grand fundamental shift in supply, Commerzbank said in a note.

The WSJ Dollar Index, which measures the dollar against a basket of currencies, gained 0.08% to 86.17 on Monday but remained 1.75% down on-the-month.

As long as the dollar continues to track lower and non-U.S. growth continues to revive, traders can expect to see increases in base metals prices, SEB Markets's Mr. Schieldrop said.

Investors were watching for further, unofficial Chinese PMI data, due Tuesday morning. After that, they will likely look to the release of nonfarm jobs numbers out of the U.S., slated for Friday.

Among precious metals, palladium rose 0.88% to $887.75 a troy ounce, platinum rose 0.36% to $937.40 a troy ounce, and silver rose 0.12% to $16.73 a troy ounce.

Among base metals, zinc fell 0.75% to $2,806.50 a metric ton, aluminum fell 0.42% to $1,919.50 a metric ton, tin gained 0.60% to $20,825 a metric ton, nickel rose 0.05% to $10,275 a metric ton, and lead fell 0.43% to $2,338 a metric ton.

Write to David Hodari at David.Hodari@wsj.com

Copper prices rose to fresh two-year highs on Monday after an official gauge of manufacturing activity in China came in below expectations but remained in expansionary territory.

Futures for September delivery was recently up 0.6% at $2.8920 a pound on the Comex division of the New York Mercantile Exchange, on track for the highest close since May 2015.

China's manufacturing purchasing managers index, a gauge of factory activity, fell to 51.4 in July, falling short of expectations for 51.6 but still signaling expansion.

The steady manufacturing data built on optimism from increased Chinese growth forecasts from the International Monetary Fund last week, as well as Chinese government remarks about the possible curtailment of scrap copper imports.

"Those gains are continuing across the board in metals this morning, thanks to those solid Chinese PMI figures and it falls into the same story as the IMF's adjusted Chinese [growth] forecasts last Monday," said Bjarne Schieldrop, SEB Markets's chief commodities analyst.

As long as the dollar continues to track lower and non-U.S. growth continues to revive, traders can expect to see increases in base metals prices, SEB Markets's Mr. Schieldrop said.

Still, market participants were handed a note of caution when Commodity Futures Trading Commission data showed that last week's copper gains were driven by speculative activity rather than any grand fundamental shift in supply, Commerzbank said in a note.

Meanwhile, gold for December delivery was recently near flat at $1,274.90 a troy ounce in New York. paring losses as the U.S. dollar gave back gains.

Investors were watching for further, unofficial Chinese PMI data, due Tuesday morning. The release of nonfarm jobs numbers out of the U.S. is slated for Friday.

Stephanie Yang contributed to this article.

Write to David Hodari at David.Hodari@wsj.com

(END) Dow Jones Newswires

July 31, 2017 11:02 ET (15:02 GMT)