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Copper Drops, Gold Rallies as Chinese Stock Market Crash

July 27, 2015 at 10:12 by Vladimir Vyun

The major piece of news released on Monday was the crash of the Chinese stock market. While it led to the drop of European shares as well, it had a mixed impact on the metal market.

China’s stock market has been in a decline for some time now, forcing nation’s authorities to step in, limiting short sales of Chinese equities. Yet all the attempts to curb the decline were in vain as the market collapsed the moment the government eased its support. The benchmark Shanghai Stock Exchange Composite Index tumbled more than 8 percent during today’s trading session, demonstrating the biggest single-day slump since February 2007.

Metals showed a varied reaction to the news. Gold jumped even though the metal usually falls when China shows signs of weakness. Most likely, bullion profited from its role of a safe asset. Copper demonstrated a more predictable behavior, sinking after the event.

December futures for delivery of gold jumped 1.15 percent to $1,098.50 per troy ounce as of 10:09 GMT on COMEX today. At the same time, September copper declined 0.9 percent to $2.361 per pound.

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