Copper trims gains from Summers rally with Fed meeting in focus

             Copper futures were higher on Monday, albeit off the best levels of the session, as investors looked ahead to the Federal Reserve’s upcoming two-day policy meeting, which concludes on Wednesday, amid ongoing speculation over the timing of the central bank’s widely expected reduction in monthly bond purchases.

On the Comex division of the New York Mercantile Exchange, copper futures for December delivery traded at USD3.213 a pound during European morning trade, up 0.3%. 

Copper prices rose by as much as 2.1% earlier in the day to hit a session high of USD3.271 a pound. The December contract settled 0.2% lower at USD3.203 a pound on Friday.

Copper prices were likely to find support at USD3.191 a pound, Friday’s low and the weakest level since August 8 and resistance at USD3.282 a pound, the high from September 11.

Copper futures rallied sharply as the U.S. dollar sank after former U.S. Treasury secretary Larry Summers withdrew himself from consideration to be the next Federal Reserve chairman.

Summers’ withdrawal leaves Fed Vice Chairwoman Janet Yellen as the frontrunner for the job, who some analysts say may favor a slower reduction in U.S. stimulus.

The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, was down 0.4% to trade at 81.34, trimming an earlier loss of as much as 0.6%.

Traders now turned their attention to this week's U.S. monetary policy decision on Wednesday, amid speculation the Fed will start tapering its bond-buying program at its upcoming policy meeting this week.

The central bank is scheduled to meet September 17-18 to review the economy and assess policy.

Market analysts expect the Fed will cut monthly purchases of Treasuries by USD10 billion to USD35 billion and keep mortgage-bond buying unchanged at USD40 billion.

The Fed’s stimulus program is viewed by many investors as a key driver in boosting the price of commodities as it tends to depress the value of the dollar.

Elsewhere on the Comex, gold for December delivery rose 0.5% to trade at USD1,314.80 a troy ounce, while silver for December delivery advanced 0.65% to trade at USD21.86. - investing.com