Copper rises ahead of U.S. data, Fed stimulus outlook

Copper rose on Wednesday and recovered from three days of declines ahead of U.S. data that may show durable goods orders posted a minor decline in August following a major slump in July, while sales of new single-family houses reached a 420 000 annual rate. Fed stimulus outlook capped gains.

On the Comex division of the New York Mercantile Exchange, copper futures for December delivery rose by 0.25% to $3.265 per pound at 12:28 GMT. Prices held in range between days high and low of $3.275 and $3.254 per pound respectively. The industrial metal fell by 0.9% on Tuesday and trimmed its weekly decline to 1.2% following Wednesdays advance.

Copper pared weekly losses as analysts projected a rise to 0.420 million New Home Sales in the U.S. in August, compared to 0.394 million in July. A separate report might show that Durable Goods Orders fell in August by a mere 0.1% following a steep 7.4% plunge in July.

On Tuesday, data showed that U.S. home prices rose in July. Year-on-year, the S&P/Case-Shiller Composite-20 Home Price Index jumped 12.39% from a year earlier after adding 12.07% in the preceding period, almost matching analysts’ expectations. At the same time, the U.S. Federal Housing Finance Agency reported that the U.S. House Price Index rose by 1.0% in July, surpassing analysts’ projections for a surge by 0.9% after advancing 0.7% in June.

Meanwhile, data showed that inventories monitored by the London Mercantile Exchange fell for a fifteenth session to the lowest since March at 547 550 tons.

Gayle Berry, an analyst at Barclays Plc in London, said for Bloomberg: “People are now becoming more positive from the macro perspective.”

Gains however remained limited as expectations for stimulus tapering returned to the market following the initial surprise last Wednesday when the Fed refrained from paring its bond purchases. On Monday, Federal Reserve Bank of New York President and vice chairman of the FOMC William Dudley said that policy makers must forcefully push against headwinds. “The economy still needs the support of a very accommodative monetary policy,” Dudley said. “Improving economic fundamentals versus fiscal drag and somewhat tighter financial conditions are pulling the economy in opposite directions, roughly canceling each other.”

Meanwhile, Atlanta Fed President Dennis Lockhart said that monetary policy should focus on creating a more dynamic economy. He also backed Fed’s bond purchasing program.

This comes after St. Louis Fed President James Bullard said on Friday that the Federal Reserve could still trim its monetary easing program in October if economic data lay support. “October is a live meeting,” he said for Bloomberg. “I’m not saying it’s going to happen, but the possibility exists.”