LONDON – Copper prices approached a three-year high on Thursday, as better-than-expected Chinese manufacturing data bolstered the market.
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Three-month London Metal Exchange copper futures gained 0.94% to $6,840 a metric ton midmorning trading.
Gold, meanwhile, fell 0.23% to $1,305.70 a troy ounce, dragged down by a gentle rally in the dollar. The WSJ Dollar Index, which measures the dollar against a basket of currencies, was up 0.17% to 86.08.
China's official manufacturing purchasing managers index came in at 51.7 in August, beating expectations, ING said in a morning note. A reading above 50 indicates expansion.
"These stronger numbers could offer some further immediate support to the base metals complex," the bank said.
Copper, which is up nearly 24% this year, has recently been supported by supply disruptions and declining inventories.
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Adding to the base metal's bullish sentiment was China's robust demand for metals, said Nitesh Shah, a commodity strategist at ETF Securities.
"Copper has been persistently in a supply deficit and I have long argued that the metal has been underpriced in the past five years," Mr. Shah said, adding that we are now seeing a "catch up."
However, the last remaining copper supply problems appear to be resolving themselves, Commerzbank said in a morning note.
Freeport-McMoRan, the American company that operates the Grasberg mine in Indonesia, has recently reached an agreement with the government, allowing long-term operation of the mine to continue. "I'm surprised how the market hasn't acknowledged that in terms of price," Mr. Shah said, pointing to a certain skepticism in the market on how smoothly the deal will work.
Looking ahead, investors were awaiting U.S. nonfarm payrolls, due out Friday, often viewed as a bellwether for future Federal Reserve interest rates policy. Market participants were also monitoring for further remarks from U.S. and North Korean leaders.
Among other base metals, zinc rose 1.39% to $3,129 a metric ton, aluminum rose 1.05% to $2,115 a ton, tin fell 0.17% to $20,620 a ton, nickel rose 0.86% to $11,710 a ton, and lead rose 0.50% to $2,390 a ton.
Among precious metals, palladium fell 0.87% to $938.05 a troy ounce, platinum fell 0.27% to $988.80 a troy ounce, and silver fell 0.17% to $17.39 a troy ounce.
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(END) Dow Jones Newswires
August 31, 2017 06:26 ET (10:26 GMT)