LONDON: Copper prices bounced off three-week lows on Monday after robust factory data in China raised hopes of recovering demand in the world's top metals consumer.
The copper price has rebounded strongly since touching four-year lows in March but has held to a tight range since it hit a two-year peak in mid-July.
Copper has been caught in a tug of war between bearish investors citing resurgent coronavirus cases and bulls latching on to increasingly strong economic data.
Monday's numbers showed manufacturing activity in China expanded at its fastest pace in nearly a decade while factories in the euro zone showed their first growth since early 2019.
"It's very tricky to read the market lately; you have a lot of mixed news," said Gianclaudio Torlizzi, partner at Milan consultancy T-Commodity.
"My view is that copper is overvalued at the current level and is vulnerable to some weakness. I would not chase it at current levels - and if there is a trade to be done, it's on the short side."
Three-month copper on the London Metal Exchange (LME) was up 1.1% at $6,483 a tonne by 1600 GMT, erasing losses after touching its lowest since July 10 at $6,301.
Torlizzi said he had a short position in the options market with a strike price of $5,500 a tonne.
The Yangshan copper premium in China has declined to $83.50 a tonne, its lowest since June 15 and down from $99 two weeks ago.
The dollar index rose 0.4%, making dollar-denominated metals more expensive for holders of other currencies.
LME aluminium surged 2.1% to $1,749 a tonne, its strongest since Feb. 14. Computer-driven funds have been buying recently, broker Marex Spectron said in a note.
Lead fell 0.5% to $1,869.50 a tonne after touching $1,889, its highest since Feb. 19, while zinc dropped 0.3% to $2,311.50.
Nickel rose 1.2% to $13,955, having hit $14,025, the strongest since Jan. 21, and tin added 0.7% to reach $18,025.-Reuters
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