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Copper Rebounds From Two-Year Low As Investors Pour Into Metals

August 7, 2019 at 19:32 by Andrew Moran

Copper is rebounding midweek after the industrial metal slumped to its lowest level in two years. Investors are taking advantage of multi-year lows, lifting copper prices from the red ink of the last couple of months. The red metal also experienced a boost when President Donald Trump urged the US central bank to cut rates three more times, which would offer a short-term stimulus to the world’s largest economy.

September copper futures tacked on $0.03, or 1.1%, to $2.585 per pound at 19:09 GMT on Wednesday on the Comex division of the New York Mercantile Exchange. Copper has had several rough trading sessions, stemming primarily from latest the escalation in the US-China trade strife. The industrial metal is already on track for a weekly decline and it has tumbled more than 2% on the year.

It appears that traders are going on a buying spree ahead of the much-anticipated global deficit. Industry experts have been sounding the alarm in recent months about how supply will be unable to match demand, primarily because mines are exhausted, new mines are not opening fast enough, and regulators are taking too long approving proposals.

New data do show that there is surging physical demand in China. Analysts note, however, that the demand outlook is uncertain due to the trade spat.

This week, copper prices fell to their worst levels since June 2017. As the trade dispute between Washington and Beijing intensify, investors fear that it will impact international commerce and exacerbate the global economic slowdown. When the economy cools down or contracts, it can affect the demand for copper, which is mainly utilized for construction, technology, and manufacturing.

The consensus is that tit-for-tat measures could enhance the severity and diminish business confidence.

Copper also received a slight boost from a weaker US dollar as the greenback dipped 0.08% to 97.55. The buck has tumbled nearly 1% since the White House announced new 10% tariffs on China and listed the People’s Bank of China (PBOC) as a currency manipulator.

This comes after President Trump pushed the Federal Reserve to slash interest rates three more times to support economic growth. The Fed pulled the trigger on a quarter-point cut last week and the market anticipates one more this year, possibly as early as next month.

In other metal markets, September gold futures spiked $32.10, or 2.17%, to $1,516.40 per ounce. October silver futures soared $0.74, or 4.5%, to $17.185 an ounce. September platinum futures added $16.20, or 1.9%, to $869.40 per ounce. September palladium futures shed $24.10, or 1.68%, to $1,412.90 an ounce.

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