By Amrith Ramkumar 

Copper prices advanced Monday, with investors continuing to bet that Chinese economic strength and lower supplies will buoy base metals.

Copper for September delivery closed up 1.4% at $2.9805 a pound on the Comex division of the New York Mercantile Exchange -- its highest close since November 2014. The industrial metal reached a nearly three-year high of $3.0025 earlier in Monday's session.

Prices have gained more than 15% since the end of May, supported by confidence in the global economy and a weaker dollar. The WSJ Dollar Index, which tracks the U.S. currency against 16 others, was down 0.4% Monday. A weaker dollar makes dollar-denominated metals more affordable to foreign buyers.

Although the International Copper Study Group reported a seasonally adjusted supply surplus for May on Friday, many investors and analysts think supply will tighten in the future while demand growth stays steady.

China, which accounts for almost half of the world's copper consumption, has posted better-than-expected economic growth figures so far this year, though some analysts caution that a second-half slowdown could send copper prices lower.

"In our opinion, this price level is not justified," Commerzbank analysts wrote in a note. "Metals prices only seem capable of moving in one direction just now -- namely upwards," they wrote.

Some analysts and investors are also concerned that much of the recent copper rally is being driven by speculative investors. Net bullish bets on a higher copper price by hedge funds and other speculative investors have set new all-time highs each of the last three weeks, according to Commodity Futures Trading Commission data going back to 2006.

Among precious metals, gold for December delivery closed up 0.4% at 1,296.70 a troy ounce. The haven asset hit its highest level since November early in Friday's session before retreating after President Donald Trump's chief strategist Steve Bannon left the administration. Some investors viewed Mr. Bannon as an obstacle to the Trump administration's agenda, with U.S. political uncertainty one of the factors that had supported gold prices in recent sessions.

Still, some analysts think further geopolitical tensions between the U.S. and North Korea or other disruptions could stoke demand for gold and send prices higher.

Many will also be closely watching the Federal Reserve's Jackson Hole conference later this week for clues about future interest-rate increases. Minutes from the Fed's latest meeting released last week showed officials divided on when to raise rates amid sluggish inflation. A longer period without a rate increase could also boost gold, which struggles to compete with yield-bearing assets when borrowing costs rise.

(END) Dow Jones Newswires

August 21, 2017 14:33 ET (18:33 GMT)

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