Copper price rises on US growth and China recovery signs

[Ben Graham]

Copper prices rose on Friday, putting the metal on track for a fourth straight weekly gain, as upbeat economic signals from the U.S. and China buoyed demand expectations.

The benchmark three-month copper contract on the London Metal Exchange (LME) rose as much as 0.8% to $9,898 per metric ton, hovering near its highest level in a month. Futures on the COMEX also gained, with the most-active contract climbing 1% to $4.5880 per pound ($10,093/t).

Economic tailwinds from the US and China

In the US, revised government data showed the economy expanded at a 3.3% annualized pace in Q2, stronger than the previously reported 3% growth. The revision was driven by a pickup in business investment, which jumped 5.7%, alongside resilient consumer spending and support from trade.

Meanwhile, in China, industrial profits fell in July at a slower pace than in June, hinting that government efforts to curb overcapacity and stabilize manufacturing may be beginning to take effect. A moderation in profit declines could support downstream demand for industrial metals, including copper.

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Bloomberg Intelligence analysts noted that metals prices “appear set for an upswing in the near term as dollar bears’ case remains compelling,” adding that recent volatility in the greenback against Group of 20 currencies is “unlikely to alter the case for a cyclically bearish dollar” in the second half of the year.

Goldman Sachs analysts, however, cautioned that while US rate-cut expectations and supportive regulations have lent stability, looser physical markets and lingering weakness in Chinese economic data could weigh on the sector. The bank reiterated its year-end LME copper forecast of $9,700/t, maintaining a bearish stance on aluminum.