London copper rose more than 2% on Wednesday, headed for its biggest daily rise since mid-November, as the US Congress struck a deal to avert a fiscal disaster and upbeat China data indicating steady improvement in the world's top copper consumer also boosted prices.
The US Congress approved a tax increase for the nation's wealthiest households in a last-minute deal, ending the US "fiscal cliff" crisis that threatened a US recession and roiled world financial markets.
The resolution that came after months of political wrangling sent Asian stocks to a five month high, weighed on safe haven dollar and boosted industrial metals that thrive on a better economic outlook.
Three month copper on the London Metal Exchange climbed to a near three week high of USD 8,130 a tonne, but pared gains later.
Mr Dominic Schnider, an analyst at UBS Wealth Management in Singapore said that "Less tail risk in the US, China coming up with a cyclical bound, combined with a weaker dollar. Voila! There you have the higher prices.”
He added that Copper is expected to rise towards USD 9,000 in the first half of the year before weakening in the second half due to solid supply growth and less incremental demand.
Mr Schnider said that "If metals prices rally, it is probably not for a structural reason but a cyclical bound. We would like to sell into metal rallies."
China's official manufacturing purchasing managers' index held steady in December at 50.6, matching November's seven month high and adding to evidence that the world's second-largest economy was headed towards steady growth revival.
Source:
http://www.steelguru.com/metals_news/Copper_aims_at_biggest_daily_rise_in_6_weeks_on_US_fiscal_deal/297064.html
