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Copper Falls on Disappointing Chinese Data, Trade Uncertainty

September 17, 2019 at 18:07 by Andrew Moran

Copper futures are sliding on Tuesday, driven by disappointing data from the world’s second-largest economy and uncertainty over US-China trade negotiations. Despite topping $2.70 over the weekend, it has pared those gains and is now trading just above the $2.60 mark. Are metal investors losing hope in Washington and Beijing reaching a trade deal before the year is over?

November copper futures tumbled $0.015, or 0.54%, to $2.6265 per pound on the Comex division of the New York Mercantile Exchange. Copper prices are up about 2% so far this month, but they have slipped into negative territory by 0.5% year-to-date.

Markets have been bearish on the industrial metal over the last two sessions.

In China, value-added industrial production rose 4.4% in August, the smallest gain in output since February and below the market forecast of 5.2%. Retail sales jumped 7.5% year-on-year last month, short of the median estimate of 7.9%. Fixed-asset investment in the January-to-August period climbed 5.5%, just short of the 5.6% investors had penciled in.

On Thursday, US and China trade representatives will begin their deputy-level talks in Washington. This will lead to high-level discussions next month. While many parts of global financial markets are holding out hope for progress in the 18-month standstill, aspects of the commodities trade are taking a wait-and-see approach. Since the start of the trade war, there have been numerous reports of a nearby agreement, only for talks to fall through and the two sides escalating their trade dispute.

In the backdrop this week is the Federal Reserve’s two-day Federal Open Market Committee (FOMC) policy meeting. What was certain to be a meeting to cut interest rates by 25 basis points, fed fund traders now anticipate that there will not be a rate cut, deferring a move to October.

A lack of a rate cut could be bad for the red metal because it would not send a jolt to the economy. Copper is an important component for construction, manufacturing, and other industrial sectors, so without a cash injection, copper may not enjoy a rally.

In other metal markets, December gold futures tacked on $1.00, or 0.06%, to $1,512.50 per ounce. October silver futures added $0.10, or 0.55%, to $18.125 an ounce. October platinum futures edged up $4.60, or 0.49%, to $943.80 per ounce. October palladium futures advanced $4.90, or 0.31%, to $1,597.10 an ounce.

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