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Copper Dips on Fears October Rally Is Overstretched

October 31, 2017 at 14:06 by Andrew Moran

Copper futures are trading lower on Tuesday on fears that the October rally is overstretched. Copper prices have risen as much as 5% this month and have been trading at their best levels since the summer of 2014, but traders see the red metal heading either sideways or downwards for the remainder of 2017.

December copper futures tumbled $0.013, or 0.43%, to $3.098 per pound at 13:52 on Tuesday. For most of October, the industrial metal has been above the crucial $3 mark.

Analysts say that copper will have a difficult time trying to maintain those gains for the rest of the year. Some investors have warned that it is inevitable that copper prices will descend, citing poor demand for the industrial metal and a paucity of tightness in copper supplies.

Reuters is reporting that some of the biggest copper markets are forecasting prices to be below the important $3 threshold. Speaking at the LME Week industry gathering in London on Tuesday, Chile mining minister Aurora Williams projects copper prices to average $2.95 a pound in 2018.

Meanwhile, CME Group, the world’s biggest futures market operator, announced on Tuesday that it would launch a copper premium Shanghai contract to take advantage of the increase in copper trading on its Comex exchange. Last year, the London Metals Exchange (LME) saw its trading volumes slip 4.1%, while Comex reported a 30% surge in copper trading volumes.

Our new copper contract will provide the first, financial settled exchange-traded futures product to enable customers and market participants to hedge their exposure to the China copper premium.

We believe this new contract, which will complement CME Group’s existing physically delivered benchmark COMEX copper futures, will become a reference price for copper traded in or delivered to China.

Other metals are in the red on Tuesday. December gold futures slipped $5.29 or 0.41%, to $1,272.40 an ounce. November silver futures slid $0.08, or 0.52%, to $16.76 per ounce. November platinum futures dipped $2.70, or 0.29%, to $923.70 an ounce. December palladium futures rose $11.50, or 1.19%, to $974.15 an ounce.

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