Copper futures bounce back but investors watch with raised eyebrows

Investors were cautious about committing to copper on Friday though the base metal was increasing in value, according to Reuters.

One trading session after suffering sharp losses, copper futures were on the rise but the globe's largest economic system might be staring at the very real possibility of running into a double dip recession if political leaders cannot settle the impasse over the fiscal cliff. More than $600 billion in tax hikes and spending cuts are looming once the new year dawns.

Copper, which is sensitive to domestic and worldwide economic and financial developments because of its myriad uses in numerous industrial settings, was trading lightly on Friday.

"You're likely to see a resolution to that relatively soon … but with the latest uncertain developments overnight, you could see market jitters increase, and I would expect that to be negative for industrial metals," economist Ross Strachan with Capital Economics told Reuters on Friday.

At 2:12 p.m. on Friday, copper futures gained 0.81 percent, a 0.0285-cent lift to $3.5645 per pound.

Boehner's bomb
Tepid support for the back-up plan crafted by Speaker of the House John Boehner proved to be of concern to investors watching developments with fiscal cliff negotiations.

The Ohio Republican's political henchmen expressed minimal support for his counter in negotiations with President Barack Obama as the end-of-year deadline stands 10 days away.

But the U.S. economy, the globe's largest, demonstrated unanticipated indications of growth last month despite the troubles with the fiscal cliff.

Consumer spending pushed to its sharpest gains in 36 months and a metric that gauges investment in business leaped higher.

Yet when it comes to prospects for the reddish metal, all eyes shift to the east.

Demand from the Asian nation
For next year, China – the globe's top consumer of the reddish metal and host of the world's second-largest economy – is forecast to continue recovering.

After a rough economic year, the country has been rebounding as of late.

"There has been a recovery in the Chinese economy, but it is weaker than many seem to believe. We think Chinese demand (for copper) is going to be much weaker than people expect because of the high stock levels," Strachan told Reuters.

The country imported 27 percent less copper last month as compared to figures from November 2011.

But a closer look at the Asian nation's record for that metric tells a different story.

Refined imports bounce back
China saw an 8.7 percent gain in refined copper imports last month. Bloomberg reports.

Imports pushed to the highest level in five months, amounting to 250,666 metric tons. That figure trumps the 230,695 tons from October.

Regarding exports, last month's figures in China drove to their highest rate in five months.

"There is only moderate improvement in local demand in the fourth quarter, so some companies would rather export than keep the metal within China," analyst Yuan Zheng with East Asia Futures Co., told the news source on Friday. "It's likely that exports will remain at a relatively high level compared with only a few thousand tons in the past."

But an eye toward the end of the year kept in mind the base metal's recent performance.

Four days of drops
This past Monday through Thursday saw the base metal lose value, according to The Wall Street Journal.

For that reason, many investors cashed out on Friday.

From December 12 through Thursday, copper futures lost 5 percent of their value.

And as the year draws to a close, prospects are slim for heavy deals.

"A number of players are already on holiday and that will only be worse next week when half the market is away," states a note penned by traders with RBC Capital Markets, according to The Wall Street Journal.