NEW YORK (Dow Jones)--Better-than-expected U.S. home sales data boosted copper futures in late morning trade, as prices continued to draw strength from a bullish report by Goldman Sachs and a weak dollar.
The most actively traded contract, for July delivery, was up 2.20 cents, or 0.6%, at $4.0135 a pound in midday trade on the Comex division of the New York Mercantile Exchange.
Thinly traded May-delivery copper was up 2.45 cents, or 0.6%, at $4.0145 a pound.
New-home sales rose by 7.3% on a monthly basis to a seasonally adjusted annual rate of 323,000 in April, beating expectations that sales would remain unchanged at 300,000. However, April sales are down 23.1% from last year, when a first-time home buyer tax subsidy ended.
The lackluster recovery in the U.S. real-estate market has been a detractor from copper demand, as the metal is widely used in residential construction for electrical wiring and copper plumbing.
"I don't think we should get too excited about housing, it remains depressed with a lot of problems. I don't see it recovering until the end of 2012," said Bill O'Neill, a principal with LOGIC Advisors.
Goldman Sachs said current copper prices offer "an attractive opportunity" to establish long positions in the metal, or a trading strategy that is profitable when prices rise. The investment bank has a history of making influential recommendations to buy or sell certain commodities, including a 2008 call for oil prices to reach $200 a barrel that helped fuel the rise to record price levels that year.
Goldman last roiled the copper market in April, when the bank said a supply shortfall expected this year would be deferred and recommended producers lock in their sales prices. At the time, front-month copper prices fell 0.6%.
However, Goldman's support may not be enough to snap copper prices out of their trading range.
"We're caught in a range, so on a good dip you get long and on a strong rally you sell into it," said Frank Lesh, broker and futures analyst at FuturePath Trading. He added that some customers have been selling their copper holdings Tuesday, despite the Goldman news.
A weaker dollar gave copper prices a boost. Dollar-denominated copper futures appear cheaper to investors holding other currencies when the greenback weakens.
The ICE Dollar Index, which tracks the dollar against a basket of currencies, was at 75.954 in midday trade, compared to 76.151 late Monday in New York.
-By Tatyana Shumsky, Dow Jones Newswires; 212-416-3095; tatyana.shumsky@dowjones.com
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