Copper fluctuates with U.S. economy, China liquidity concerns in focus

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Investing.com - Copper futures fluctuated between modest gains and losses on Monday, as market sentiment remained mildly supported after Friday's upbeat U.S. economic growth data, while lingering concerns over higher borrowing costs in China weighed.

On the Comex division of the New York Mercantile Exchange, copper futures for March delivery traded at USD3.306 a pound during European morning trade, down 0.05%. Comex copper prices traded in a range between USD3.299 a pound and USD3.315 a pound.

Copper prices were likely to find support at USD3.291 a pound, the low from December 20 and resistance at USD3.323 a pound, the high from December 19.

The March contract settled 0.38% higher on Friday to end at USD3.308 a pound.

The Commerce Department said Friday that the U.S. economy expanded by 4.1% in the third quarter, well above initial estimates for 3.6% growth, adding to signs that the economic recovery is gaining traction.

Also, the International Monetary Fund on Sunday raised its forecast for 2014 U.S. economic growth to 2.5%, up from the 1.6% it expects the country to grow this year.

IMF Managing Director Christine Lagarde said on NBC's "Meet the Press" said that the recent budget deal in Washington and the Federal Reserve's decision to taper its bond buying program eased doubts about the future.

The U.S. is second behind China in global copper demand.

Meanwhile, investors continued to fret over tightening liquidity conditions and rising borrowing costs in the Chinese financial system.

The benchmark seven-day repo rate jumped to 9.8%, the highest since June. Market players have remained cautious over the level of bad debt at Chinese banks, particularly when interbank lending rates are high.

China is the world's largest copper consumer, accounting for almost 40% of world consumption last year.

Elsewhere on the Comex, gold for February delivery fell 0.8% to trade at USD1,194.00 a troy ounce, while silver for March delivery declined 0.5% to trade at USD19.35 a troy ounce.

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