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Third Day of Fast Losses for Copper on Cyprus Deadlock

March 19, 2013 at 18:31 by Andriy Moraru

Copper continued its downward slide today as the Cypriot lawmakers are expected to reject bank-deposit tax, maintaining a dangerous level of uncertainty. Other industrial commodities felt influence of the small nation’s financial and political crisis.

While gold is rising beyond $1,600 level quite well on such news, copper, which is extensively used in various industries and real estate development, suffers, even though the housing data from the United States comes out better than expected.

The EU proposed plan to tax accounts of €100,000 or less by 6.75% and those over by 9.9% was changed to apply no tax for accounts below or equal to €20,000. Still, the related law has to be approved by the Cypriot parliament, which is likely to reject the proposal or postpone its approval. In either case, the outcome for growth-related commodities remains negative. If the law passes, it will create a risky precedent, which will reduce reputation of the global financial system. If the law is rejected, the eurozone fiscal crisis will worsen as institutional investors will come out losers with Cyprus bonds.

Copper fell from $3.4153 to $3.3750 per pound on COMEX as of 18:27 GMT today. It is currently trading at late-August 2012 prices. Crude oil (Light Sweet) fell from $94.16 to $92.59 today.

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