Copper costs currently $8,250 per tone while on Friday it was till quoted at $8,080 per tone. Contracts for delivery of copper in three months on the London Metal Exchange gained 0.8% to $8,132 per tone.

Shipments of copper and copper products to China increased to 2.13 million tons in the first nine months of the year. It is a 41.0% increase when compared to last year, informs the Chinese customs office. Prices of this commodity increased by 19% this year due to higher demand from the Chinese economy. Analizing the copper market, one has to note the turmoil on the currency market. Copper gaining value since Fridaym, can be attributed in the weakening of the American dollar against the major currencies around the world. The greenback declined once again below the $1.42 level against the euro. Commodity markets are usually negatively correlated to the USD and they move in different directions.

The last price increases of copper are alos due to the recovering American economy. A lower cost of money is spuring investments and what the Fed hopes, it will bring the housing market back from recession. The improving situation on this market causes demand for this commodity to increase, since it is one of the main construction materials. That is why, very important are investors expectations about another interest rate cut in the US. Many analysts forecasts that it is necessary to avoid recession. Another cut of the federal funds rate in the US will weaken the American currency but will spur demand for commodities.

From the technical analysis standpoint, the copper market almost reached an important resistance level at $8,270. Breaking this level will open the way for the $8,350 high from the beginning of the month. Nevertheless, the future of the copper market will be decided by the table, on which the Fed governors will sit and decide on the level of interest rates in two weeks time.

Adam Narczewski