Sept. 18 (Bloomberg) -- Copper futures rose the most in two weeks on speculation that the Federal Reserve will limit the pace of cuts in fiscal stimulus in the U.S., the world’s second- biggest consumer of the metal.
Thirty-three of 64 economists surveyed by Bloomberg predict the Fed will reduce its $85 billion of monthly debt-buying by $5 billion or less, while 31 forecast a cut of $10 billion or more. An announcement is due at 2 p.m. New York time. Builders in the U.S. began work on fewer homes than projected in August, a government report showed today, highlighting the risk that rising borrowing costs will hamper the expansion.
“It’s looking like the market is thinking we’ll see less tapering rather than more,” Sterling Smith, a futures specialist at Citigroup Inc. in Chicago, said in a telephone interview. “The Fed is probably just going to dip its toe in the pool. They’ll want to go slow.”
Copper futures for December delivery rose 1.7 percent to close at $3.2785 a pound at 1:17 p.m. on the Comex in New York, the biggest gain for a most-active contract since Sept. 3.
The Copper Development Association says construction generates about 40 percent of demand for use in pipes, wiring and roofing. China is the biggest consumer.
“Housing has been one of the cornerstones for the U.S. recovery,” said Ole Hansen, the head of commodity strategy at Saxo Bank A/S in Copenhagen. “Any setback here could add to the dovish sentiment that has crept in over the past few weeks.”
Copper stockpiles monitored by the London Metal Exchange fell for the 10th straight session. They have dropped 5.3 percent since Sept. 4.
On the LME, copper for delivery in three months climbed 1.5 percent to $7,184 a metric ton ($3.26 a pound). Aluminum, lead, nickel, zinc and tin also advanced.
Markets in China will be shut tomorrow and Sept. 20 for national holidays.
--With assistance from Maria Kolesnikova in Moscow. Editors: Thomas Galatola, Patrick McKiernan