Punters Rally In Copper Halts
A fast-moving speculative rally in copper ground to a halt on Thursday afternoon and dealers wagered the metal's upside momentum was spent.
Market talk pinned the rally, which took copper some $50 higher during the pre-market to $2,609 at its peak, to options-related covering and borrowing by a Far East firm.
Prices had gapped higher on Wednesday, gaining some $40 and hitting 13-month highs, and the surge was extended seamlessly on Thursday morning. But midway through the rings, three months copper came off the boil and eventually settled well off its highs at $2,590 per tonne, which was still a gain of $29 from Wednesday's kerb close.
A trader said the large Far East firm had to cover upside call options it had granted but it had done a trade-off deal with a large US investment bank outside of the ring, taking the heat out of the market.
An options source said the firm's strategy was to buy nearby in-the-money options and finance them by granting forward out of-the-money calls and puts.