Copper en route to best weekly performance in a year

Copper remained fairly unchanged on Friday and is headed for its best week in a year after the Federal Reserve refrained from trimming its monetary stimulus program on Wednesday and signs of global economic recovery throughout the week boosted demand prospects.

On the Comex division of the New York Mercantile Exchange, copper futures for delivery in December traded at $3.346 per pound at 8:48 GMT, down 0.04% on the day. Prices held in range between days high of $3.351 per pound, near yesterdays three-week high, and days low of $3.340. The industrial metal rose 1.1% on Thursday after adding 2.8% on Wednesday and extended its weekly advance to 3.9%.

Copper rallied as Feds decision to leave its monetary easing program intact weakened the dollar and fueled optimism for increasing economic activity. According to a statement after the conclusion of the summit, policy makers “decided to await more evidence that progress will be sustained before adjusting the pace of its purchases.” Chairman Ben Bernanke and his colleagues feared that the rising borrowing costs were showing signs of slowing the four-year expansion of the U.S. economy. Data showed on Tuesday that consumer inflation was struggling to pick up and remained well below Fed’s target at 2%. Bernanke once again said that there is “no fixed calendar schedule”.

Chae Un Soo, a metals trader at Korea Exchange Bank Futures Co. in Seoul, said for Bloomberg: “The Fed’s decision and the dollar’s weakness against the euro provided support for copper.”

The dollar index, which measures the greenbacks performance against six major counterparts, traded at 80.45 at 8:42 GMT, down 0.04% on the day. The December contract held in range between days high and low of 80.49 and 80.41 respectively. The U.S. currency gauge rose by 0.3% on Thursday after falling 1.3% on Wednesday and extended its weekly decline to 1.5% following Fridays minor retreat.

Dollar-priced commodities tend to trade inversely to the dollar. Weakening of the greenback makes dollar-denominated raw materials cheaper for foreign currency holders and spurs investors appetite for riskier assets.

The metal also drew support by upbeat data which pointed at consistent global economic recovery. Data showed on Monday that U.S. industrial production in August has matched analysts projections for a 0.4% expansion, compared to remaining flat in July. The Euro zone’s ZEW Economic Sentiment index surged to 58.6, surpassing economists’ expectations for a moderate gain to 47.2 from August’s 44.0 reading. Meanwhile, The Conference Board reported that its Leading Economic Index for China rose by 0.7% in August and stood at 269.3.

On Thursday, a report by the National Association of Realtors showed that existing home sales in the U.S. rose to a 6 1/2-year high of 5.48 million in August, indicating persistent recovery in the housing market. The reading was the strognest since February 2007 and defied market analysts’ projections for a drop to 5.25 million from July’s 5.39 million homes sold.

Meanwhile, data also showed that the Philadelphia FED Index, which tracks the manufacturing activity in the region, exceeded economists’ projections for a surge to 10.0 from July’s 9.3 and rose to 22.3. At the same time, the U.S. Leading Indicators index also surpassed expectations for a 0.6% advance and rose by 0.7% in August after adding 0.6% in the preceding month.