Copper headed for its first weekly gain in six months on Friday on soaring expectations that top consumer China will vigourously pursue growth measures following a leadership transition.
Brent crude oil also advanced in early trade on fears of supply disruption from the strife-torn West Asia, widening the gap with US crude to its highest in more than one year, although it still fell short of last week’s close. Gold pared down and was poised to shed more than 1% this week on the so-called US fiscal cliff and lingering global growth concerns, after gaining as much as 3% last week.
China named Xi Jinping as the president and Li Keqiang the prime minister. Both are expected to build on the economic reforms their predecessors have carried out over the past decade.
Investors also feel more clarity would emerge about the recent announcement of more than $150-billion worth infrastructure projects, which would be crucial to lifting copper demand.
Moreover, the coummunist nation declared over the weekend that its economy was turning the corner after seven quarters of a slowdown. Industrial output, exports and retail sales, all beat expectations last month. China accounts for around 40% of the global refined copper consumption.
Three-month copper on the London Metal Exchange held almost steady in early trade on Friday and was trading at $7,630 a tonne, down 0.12% from the previous session when it finished little changed. However, some gains earlier this week drove the copper price to its seven-day gain.
Prices have dropped every week since end-September as benefits from stimulus measures by central banks in the US, Europe and Japan petered out, chopping a year-to-date jump of around 10% at one point down to less than 1%.
Moreover, fears of a supply glut also affected prices, and could keep it under check for some more time.
In a recent report, Credit Suisse said late-stage expansions, major new mines and recovering output from mines hit by outages earlier this year have all combined to push the copper market into a prolonged period of surplus.
It expected the copper market to have 300,000 tonnes of surplus next year, with prices peaking at an average $8,300 a tonne in the second quarter.
Oil gained on Friday on concerns the latest Israeli-Palestinian conflict could draw Arab producers into a potentially larger tussle zone. Brent has held above $100 a barrel for most of this year on apprehensions any unrest could disrupt supplies from West Asia, although a weak demand outlook has limited sharp gains. Brent crude rose 18 cents to $108.19 a barrel by 0918 GMT, while US oil dropped 8 cents to $85.37 on higher inventories and weak demand.
However, gold headed for a weekly loss on concerns the US fiscal cliff ? tax hikes and spending reduction of close to $600 billion that will kick in early next year if Congress fails to aviod them ? is looming as a major worry in financial markets as it threatens to drive the largest economy back into recession.
