By Ira Iosebashvili and Georgi Kantchev
Copper prices rose Monday, boosted by a weaker dollar and a rally in crude oil.
Copper for December delivery was recently up 2.1% at $2.5195 a pound on the Comex division of the New York Mercantile Exchange.
The Wall Street Journal Dollar Index, which weighs the U.S. currency against a basket of 16 others, was recently down 0.5% at 91.14. Copper is priced in dollars and becomes more affordable to foreign buyers when the currency declines.
Copper also took support from oil, with U.S. crude trading up 3.3% higher at $47.91 a barrel. Swings in oil sometimes sway copper prices, as the two commodities are often traded by funds in the same basket, with a larger share allocated to crude.
Prices for the industrial metal are up over 14% this month on expectations of rising demand from top-consumer China and a boost in infrastructure spending in the U.S. under a new presidential administration. China and the U.S. are the two top consumers of copper, which is heavily used in manufacturing and construction.
Some investors, however, believe copper prices have run ahead of the metal's fundamentals and could drift lower in coming weeks.
"Although fundamentals...for copper have improved, the speed of the recent rally leaves it open to the charge that price action has been too much, too fast," Barclays analysts said in a note to clients.
Prices will come under pressure between now and the end of the year as the dollar strengthens ahead of an expected U.S. interest rate increase in December, Barclays said.
Meanwhile, hopes of freer trade flows and the prospect of more imports by China also buoyed investor sentiment.
In a speech to the Asia-Pacific Economic Cooperation forum in Lima, Peru, on Saturday, Chinese President Xi Jinping said his government would support a Free Trade Area of the Asia-Pacific and was pushing forward with the Regional Comprehensive Economic Partnership, a trade pact that includes 16 countries.
China, the world's largest copper consumer, accounts for some 45% of global demand.
Copper for three-month delivery was up 2.5% at $5559.50 a metric ton on the London Metal Exchange.
Write to Ira Iosebashvili at firstname.lastname@example.org and Georgi Kantchev at email@example.com
(END) Dow Jones Newswires
November 21, 2016 12:00 ET (17:00 GMT)
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