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Copper Futures Plunge on Surging US Dollar, Chinese Holiday

February 20, 2018 at 18:05 by Andrew Moran

Copper prices fell more than 1% on Tuesday as the US dollar surged and Chinese markets are closed for the Lunar New Year. Since spiking after President Donald Trump’s $1.5 trillion infrastructure spending announcement, the industrial metal has not been able to post any meaningful gains, likely due to the paucity of major industry news.

March copper futures tumbled $0.055, or 0.71%, to $3.193 per pound at 16:52 GMT on Tuesday on the Comex division of the New York Mercantile Exchange. The red metal is poised to settle at its lowest level in two weeks. Year-to-date, copper has slipped more than 3%.

The industrial metal was affected by a strengthening US dollar as the greenback advanced 0.51%. A stronger buck makes it more expensive for foreign investors to purchase dollar-denominated commodities. Copper has benefited in recent months from a weaker greenback as it has plummeted nearly 12% over the last 12 months.

With the Shanghai Futures Exchange (ShFE) shut down for the Lunar New Year, copper may not witness too much trading action until it reopens on Thursday. China is the world’s largest consumer of the red metal.

Last week, copper prices soared more than 2% after President Trump unveiled his massive infrastructure plan. Because he aims to build roads, construct highways, and repair bridges, traders are betting that there will be significant domestic demand for copper. This occurred shortly after the 2016 election, when Trump was victorious, and copper had its best performance in more than three decades.

Other metals are seeing red ink across the board on Tuesday. April gold futures cratered $23.70, or 1.75%, to $1,332.50. March silver futures were down $0.23, or 1.39%, to $16.48 an ounce. April platinum futures weakened $9.20, or 0.94%, to $1,002.80 an ounce. April palladium futures fell $7.55, or 0.73%, to $1,028.20 per ounce.

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