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Copper Slips to Three-Week Low Amid Dollar Boost, China Demand Worries

January 16, 2018 at 17:44 by Andrew Moran

Copper futures have tumbled to their lowest levels in more than three weeks as the industrial metal has fallen the most in six weeks. The red metal’s momentum is weakening amid a stronger US dollar and investor concerns over Chinese demand.

March copper futures slipped $0.0105, or 0.37%, to $3.206 per pound at 16:30 GMT on Tuesday on the Comex division of the New York Mercantile Exchange. The red metal is poised to settle at its worst level since December 22.

A key factor for copper prices is a rising US dollar as the greenback jumped 0.19%. A strengthening US dollar is bad for commodities like copper because it makes it more expensive for foreign investors to purchase. Copper has taken advantage of a weakening greenback over the last 12 months; the dollar declined 10% in 2017, and is already off to a shaky start to 2018, sliding 2%.

Bloomberg is reporting that traders are concerned by a paucity of copper demand from China. Beijing in the world’s biggest consumer of the red metal. Despite some positive economic data in recent weeks, many investors are still reluctant to conclude that Chinese demand will surge in 2018.

In the meantime, investors are taking profits now and adopting a wait and see approach to copper futures.

Nitesh Shah, commodity strategist at ETF Securities, told Reuters:

(We’re seeing) a bit of profit-taking on the back of a strong run. Beyond that we had some trade data from China last week which indicated imports of refined metals have been somewhat slow.

Other metals are relatively quiet on Tuesday. February gold futures dipped $0.60, or 0.04%, to $1,334.30 per ounce. March silver futures fell $0.001, or 0.01%, to $17.14 an ounce. April palladium futures shed $16.10, or 1.52%, to $1,088.60 an ounce. April platinum futures surged $4.60, or 0.46%, to $1,000.80 per ounce.

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