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Copper Futures Retreat from 3-Year High as Greenback Soars

October 17, 2017 at 16:47 by Andrew Moran

Copper prices are retreating from their highest levels in three years as the US dollar strengthens. The industrial metal has been climbing well above the $3 threshold since October 5. Investors have been bullish over the red metal because of a falling greenback and sublime Chinese data.

December copper futures tumbled $0.042, or 1.30%, to $3.197 per pound at 16:34 GMT on Tuesday. Copper prices hit their best levels since June 2014, and they have advanced roughly 26% year-to-date.

The pullback in copper stems from a climbing US dollar as the greenback jumped 0.40% on Tuesday. A stronger dollar is bad for dollar-denominated commodities because it makes it more expensive for foreign investors to purchase.

On Sunday, Federal Reserve Chair Janet Yellen reaffirmed the US central bank’s commitment to raising interest rates on the strength of the US economy and the labor market. This helped strengthen the buck and has affected gold, which is generally sensitive to a rising-rate environment because it lifts the opportunity cost and sends traders into yield-bearing assets.

Analysts do think that this may be just a one-off incident because traders are waiting for further announcements from China. On Monday, the Chinese government reported better-than-expected inflation data, diminishing concerns of lackluster economic growth. China is expected to make an announcement pertaining to copper scrap imports; experts warn that China may begin to prohibit imports in 2018, something that would be a boon for copper prices and miners.

Investors are also keeping a lookout for signals of heightened economic stimulus for the world’s biggest consumer of the industrial metal.

Other metals are in the red on Tuesday. December gold futures slipped $16.00, or 1.23%, to $1,287.00 an ounce. November silver futures slid $0.33, or 1.95%, to $17.03 per ounce. November platinum futures dipped $7.10, or 0.75%, to $935 an ounce. December palladium futures rose $5.10, or 0.52%, to $981.40 an ounce.

If you have any questions and comments on the commodities today, use the form below to reply.

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