Market Insider

Commodity Rally Underway

Here's what's moving in commodities Tuesday morning:

Copper: Copper is the standout in the broad-based overall commodity rally that's underway as bulls have come out in force on positive trade data out of China.

Reel of uninsulated copper wire
Charles D Winters | Photo Researchers | Getty Images

As of early Tuesday morning trading, copper is leading the momentum with a gain of over 2 percent, as Barclays analysts notes, Chinese preliminary copper imports "defy market expectation" by soaring to a record high.

Copper futures posted the biggest increase in a week on China’s monthly imports of the industrial metal, which surged nearly 13 percent to reach a fresh record for the month of December.

Gold: The precious metal’s rise above its 200-day moving average at $1,634 an ounce is prompting fresh buying. Traders are saying that a big part of the weakness into the end of last year was investors taking profit. Yet physical demand has remained strong.

"Buying from Asian gold-market giants — China and India — for both jewelry and investment demand has continued to remain firm," says Jeffrey Nichols, managing director of American Precious Metals Advisors.

This year could turn out much like 2011 for gold, Nichols predicts, with gains of 50 percent or more from recent lows and occasional big declines.

Oil: As of early Tuesday morning trading, Brent crude futures gained more than 1 percent to $113.63, while WTI futures extended gains to nearly 2 percent to $103.17.

A 5 percent annual rise in oil imports from China is a bullish factor this morning. Concerns about possible disruptions to world oil supplies continues to support crude prices.

The European Union, which has already agreed in principle to ban Iranian oil, will hold a meeting on January 23 to officially vote on the embargo.

Meanwhile, supply risks continue to be in focus in Nigeria, where trade unions are staging a second day of strikes over fuel subsidies. The U.S. imports approximately 43 percent of Nigeria’s oil, which is of a similar grade as WTI.

Follow Sharon on Twitter: @sharon_epperson

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