Copper Prices Spike on Bargain Hunting

Copper for July delivery was gaining 1.2% to $4 a pound, edging higher after three straight days of losses as "some bargain-hunting sets in," says MF global analyst Ed Meir.

Meir notes that it was a "very bloody week for the commodity bulls" last week, "with the Reuters-Jefferies CRB finishing 9% lower over the period" amid a spate of weak jobs reports and more concerns about debt-laden Greece.

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On Friday, July copper settled below the psychological $4 a pound level at $3.9755 per pound -- a five-month low -- selling off with the euro and other currencies.

"We have maintained our bearish stance on copper for some time and suggested buying put options," says John L. Caiazzo, the CEO of brokerage firm Acuvest. "It might be appropriate to take some of the profits off the table."

A correction usually follows a sharp move in copper, Caiazzo notes.

Despite much negative news flow about the economy, Credit Agricole Corporate and Investment Bank's Senior Metals Analyst Robin Bhar believes that help is on the way following the elimination of Osama Bin Laden.

"The action taken by special forces that resulted in the death of Bin Laden has strengthened the leadership of President Obama," Bhar notes.

"This could be an opportunity to facilitate broad-based bi-partisan progress in key economic issues. Freeport-McMoRan Copper& Gold (FCX) was rising 0.9% to $50.61, while peer Southern Copper (SCCO) was losing 0.5% to $35.31. Copper miner Taseko Mines (tgb) was rising 2.7% to $4.96.

Copper fabricator Encore Wire was down 0.6% to $25.19.

Mining equipment maker Bucyrus International (bucy) was flat at $91.27, while peer Joy Global (JOYG) was rising 1.8% to $91.10. Caterpillar (CAT) was adding 1.1% to at $111.51.