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Copper down as dollar rises after US growth data
Copper turned negative on Friday as the dollar rose and risk appetite weakened
- Reuters
- Published: 00:00 January 29, 2012
London: Copper turned negative on Friday as the dollar rose and risk appetite weakened after data from the US suggested the world's largest economy grew but at lower pace than had been forecast.
Copper was on track for a third straight week of gains though as investors hoped Greek debt talks would soon conclude and demand prospects were seen brighter following the US Federal Reserve's pledge to keep rates low.
Benchmark three-month copper on the London Metal Exchange was $8,530 a tonne, 0.6 per cent down from $8,590 at the close on Thursday, having earlier reached a high of $8,679.50. The metal gained 3.5 per cent last week and 11 per cent so far this year, following a 21 per cent drop in 2011.
"At the moment copper is still trading on macro sentiment despite drawdowns of inventories. We needed to see a correction anyway as the market was overbought. China is also quiet and it will take time before the Eurozone problems are resolved so copper is running out of steam a bit," said Andrey Kryuchenkov, analyst at VTB Capital.
The Shanghai Futures Exchange was closed last week for the Lunar New Year holiday. Sluggish demand from China, as well as a recovery in supplies and an uncertain economic outlook for the global economy, are set to weigh on copper this year.
Supporting copper prices, Federal Reserve Chairman Ben Bernanke said the US central bank was ready to offer the economy additional stimulus after it announced it was likely to keep interest rates near zero until at least late 2014.
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