Metals: Copper Prices Hit Highest Level Since November 2014

Gold prices advanced Monday after a week of geopolitical uncertainty following the Barcelona attacks and recent tensions between the U.S. and North Korea.

The precious metal ticked up 0.27% to $1,288 a troy ounce in midmorning trade.

Copper also gained, up 1.19% to $6,558 a metric ton, as China's refining capacity cuts contributed to bullish sentiment across the metals complex.

Gold prices were at their highest since November on Friday amid political and security concerns in the U.S. and Spain, said Robin Bhar, head of metals research at Société Générale CIB.

"There are lots of questions on whether Trump can actually put into place some of his policies on tax caps and infrastructure expenditure, which was very high in the agenda when he was elected," Mr. Bhar said

Demand for gold was likely to remain high as the U.S. and South Korea began joint military exercises, Commerzbank said in a morning note.

Looking ahead, investors were awaiting the Federal Reserve's Jackson Hole conference Thursday, where Chairwoman Janet Yellen's keynote speech will be monitored for clues on further interest rate policy.

The prospect of a longer period without a rate increase is supportive of gold, as higher rates boost the dollar and make gold less competitive against yield-bearing assets like Treasurys.

The WSJ Dollar Index, which measures the dollar against a basket of currencies, was flat.

Among precious metals, palladium rose 0.70% to $933 a troy ounce, platinum rose 0.10% to $980.95 a troy ounce, and silver rose 0.29% to $17.03 a troy ounce.

Most of the industrial metals also gained. "I think a lot of the base metals' rally is speculative driven, but investors are now taking trading cues of commodities factors," Mr. Bhar said, pointing at China's capacity cuts amid environmental concerns.

Zinc fell 0.02% to $3,139.50 a metric ton, aluminum rose 0.65% to $2,076.50 a metric ton, tin rose 0.32% to $20,355 a metric ton, nickel rose 2.09% to $11,225 a metric ton, and lead rose 0.19% to $2,363.50 a metric ton.

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Copper prices advanced Monday, with investors continuing to bet that Chinese economic strength and lower supplies will buoy base metals.

Copper for September delivery closed up 1.4% at $2.9805 a pound on the Comex division of the New York Mercantile Exchange -- its highest close since November 2014. The industrial metal reached a nearly three-year high of $3.0025 earlier in Monday's session.

Prices have gained more than 15% since the end of May, supported by confidence in the global economy and a weaker dollar. The WSJ Dollar Index, which tracks the U.S. currency against 16 others, was down 0.4% Monday. A weaker dollar makes dollar-denominated metals more affordable to foreign buyers.

Although the International Copper Study Group reported a seasonally adjusted supply surplus for May on Friday, many investors and analysts think supply will tighten in the future while demand growth stays steady.

China, which accounts for almost half of the world's copper consumption, has posted better-than-expected economic growth figures so far this year, though some analysts caution that a second-half slowdown could send copper prices lower.

"In our opinion, this price level is not justified," Commerzbank analysts wrote in a note. "Metals prices only seem capable of moving in one direction just now -- namely upwards," they wrote.

Some analysts and investors are also concerned that much of the recent copper rally is being driven by speculative investors. Net bullish bets on a higher copper price by hedge funds and other speculative investors have set new all-time highs each of the last three weeks, according to Commodity Futures Trading Commission data going back to 2006.

Among precious metals, gold for December delivery closed up 0.4% at 1,296.70 a troy ounce. The haven asset hit its highest level since November early in Friday's session before retreating after President Donald Trump's chief strategist Steve Bannon left the administration. Some investors viewed Mr. Bannon as an obstacle to the Trump administration's agenda, with U.S. political uncertainty one of the factors that had supported gold prices in recent sessions.

Still, some analysts think further geopolitical tensions between the U.S. and North Korea or other disruptions could stoke demand for gold and send prices higher.

Many will also be closely watching the Federal Reserve's Jackson Hole conference later this week for clues about future interest-rate increases. Minutes from the Fed's latest meeting released last week showed officials divided on when to raise rates amid sluggish inflation. A longer period without a rate increase could also boost gold, which struggles to compete with yield-bearing assets when borrowing costs rise.

(END) Dow Jones Newswires

August 21, 2017 14:33 ET (18:33 GMT)