Investing.com - Copper prices rallied to a six-week peak on Thursday, as traders in China returned to the market following a week-long holiday due to the Lunar New Year.
The Asian nation is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.
On the Comex division of the New York Mercantile Exchange, copper for May delivery jumped 6.0 cents, or 2.26%, to trade at $2.703 a pound during European morning hours after hitting an intraday high of $2.705, the most since January 13.
A day earlier, copper inched up 0.4 cents, or 0.15%, to settle at $2.643.
Futures were likely to find support at the $2.616, the low from February 25, and resistance at $2.729, the high from January 13.
Data released on Wednesday showed that the preliminary reading of China’s HSBC manufacturing index rose to 50.1 in February, just above the 50.0-point level that separates growth from a contraction on a monthly basis.
Copper traders consider shifts in the HSBC PMI an indicator of China's copper demand, as the industrial metal is widely used by the sector.
Elsewhere on the Comex, gold futures for April delivery jumped $16.50, or 1.37%, to trade at $1,218.00 a troy ounce, while silver futures for May delivery rallied 36.9 cents, or 2.24% to trade at $16.84 an ounce.
Gold was boosted as investors scaled back expectations for a mid-year rate hike after Federal Reserve Chair Janet Yellen said in testimony to the Senate Banking Committee Tuesday that it was “unlikely” that economic conditions would warrant an interest rate increase for “at least the next couple of FOMC meetings”.
She added that if the economy keeps improving as the Fed expects it will modify its forward guidance, but emphasized that a modification of its language should not be read as indicating that a rate hike would automatically happen within a number of meetings.
In a second day of testimony to the Financial Services Committee on Wednesday Yellen reiterated this message, saying that wage growth and inflation must rise before the bank can hike rates, despite signs of improvement in the labor market.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, dipped 0.12% to 94.13.
Dollar weakness usually benefits gold, as it boosts the metal's appeal as an alternative asset and makes dollar-priced commodities cheaper for holders of other currencies.
Investors were looking ahead to U.S. data on jobless claims, durable goods orders and inflation later in the trading day for further indications on the strength of the economy.