Copper exchange traded funds and notes are testing their 200-day exponential moving average as trader sentiment on the industrial metal improves, which are potentially good signs for the global economy.

The recent rally in iPath Dow Jones UBS Copper Subindex Total Return ETN (NYSEArca: JJC), First Trust ISE Global Copper Index Fund (NYSEArca: CU) and Global X Copper Miners (NYSEArca: COPX) has carried the funds to the 200-day moving average, a key technical level.

Copper prices are closely watched as a leading indicator for the global economy since the metal is widely used in building and industrial sectors.

“Speculators raised bets on higher metal prices by the most since July, turning bullish on copper for the first time in four months on signs of growth in the U.S., increasing demand in China and more confidence in Europe,” Bloomberg reported Monday.

Money managers are the most bullish on copper since August, according to Commodity Futures Trading Commission data.

Copper futures are up 10% this month and are on track for the biggest January rise since 2003 after hitting a 14-month low in October, according to the report.

“It’s a play on a possible demand recovery,” Spencer Patton, chief investment officer for Steel Vine Investments, told Bloomberg. “People are now accepting gradually that the Europe situation is not that terrible, and China will probably have a soft landing. And the icing on the cake is the growth in the U.S.”

iPath Dow Jones UBS Copper Subindex Total Return ETN

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