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Copper Retreats 1% as Funds Take Profits, Return to Equities

September 12, 2017 at 16:47 by Andrew Moran

Copper futures continue to retreat from their recent highs as investment funds are selling, taking profits, and returning to equities. The industrial metal has had its best year since 2009, and copper prices have been looking to return to that same level of prominence.

December copper futures tumbled $0.032, or 1.04%, to $3.034 per pound at 16:19 GMT on Tuesday. Last week, the red metal touched a three-year high, supported by stronger Chinese demand, and a slipping US dollar. Year-to-date, copper has advanced nearly 20%, and 42% over the last 12 months.

The metal’s 20% ascent this year has been due to labor disruptions in Latin America and Southeast Asia, an improving Chinese economy, and a weaker US dollar.

The industrial metal’s fall this week is being attributed to money managers cutting their bets on higher prices. With copper futures hitting fresh highs this month, investors did not want to risk it any further and decided to take profits now. Recent London Metals Exchange (LME) data found that funds’ net longer copper positions slipped from 78,527 lots in August to 71,827 lots on Tuesday.

Inventory levels are also impacting copper prices. Copper stockpiles in LME-approved warehouses climbed 10,300 tonnes, but are still 40% under this year’s peak of 354,650 tonnes.

As the threats of hurricanes and North Korea diminish, traders are returning to the equities market.

Copper prices were negatively affected at the start of the Tuesday trading sessions when the US dollar declined. The greenback has since pared those losses and is trading relatively flat. In recent months, the US dollar has been weakening, which is good for dollar-denominated commodities like copper because it makes it cheaper for foreign investors to purchase.

Other metals are bleeding red ink on Tuesday. December gold futures slid $5.10, or 0.38%, to $1,330.60 per ounce. December silver futures slipped $0.03, or 0.18%, to $17.87 an ounce. October platinum futures fell $12.00, or 1.20%, to $986.80 an ounce. October palladium futures rose $4.85, or 0.52%, to $936.50.

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