Tag Archives: copper market

Copper drops 1% as dollar strengthens ahead of Bernanke

17 Jul

copper

Copper futures came under heavy selling pressure on Wednesday, as the U.S. dollar strengthened ahead testimony on monetary policy by Federal Reserve Chairman Ben Bernanke later in the day.

On the Comex division of the New York Mercantile Exchange, copper futures for September delivery traded at USD3.139 a pound during European morning trade, down 1.4% on the day.

New York-traded copper prices fell by as much as 1.5% earlier in the day to hit a session low of USD3.137 a pound.

Copper prices struggled for upside traction due to a broadly stronger U.S. dollar, as dollar-priced commodities become more expensive to investors holding other currencies when the greenback gains.

The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, was up 0.2% to trade at 82.80.

Market participants looked ahead to Bernanke’s testimony on monetary policy amid speculation over the timing of a possible reduction to the bank’s USD85 billion-a-month bond buying program.

Copper prices advanced 2.7% last week after Bernanke said the Fed will continue to maintain accommodative monetary policy for the foreseeable future.

Investors also looked ahead to the release of key U.S. data on housing starts and building permits later in the day.

Any improvement in U.S. economic activity could scale back expectations for further easing, boosting the dollar and weighing on silver.

The Fed’s stimulus program is viewed by many investors as a key driver in boosting the price of commodities as it tends to depress the value of the dollar.

Elsewhere on the Comex, gold for August delivery shed 0.5% to trade at USD1,284.05 a troy ounce, while silver for September delivery fell 0.9% to trade at USD19.74 a troy ounce.

Moves in gold and silver this year have largely tracked shifting expectations as to whether the U.S. central bank would end its bond-buying program sooner-than-expected.

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Copper may reach above $7,500/t before re-stabilising shorts: Barclays

11 May

LONDON (Commodity Online): Copper prices may witness further upward movement as market positioning is still short with positive demand signals from China. The base metal prices may rise above $7,500 per ton before re-stabilising shorts, stated London based Barclays in its recent market report.

This week, across the base metals complex, short-covering dominated price dynamics. In the context of extreme CTA short positioning, a stronger-than-expected US employment report alongside a surge in German factory orders for March combined to act as catalysts to fuel the move in prices.

From a fundamental perspective, stock trends have been turning more positive. LME stocks have levelled out, SHFE and Chinese bonded stocks are falling.

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Other indicators of Chinese demand are also positive, physical premiums are high, SHFE time spreads are in backwardation, the import arb is still open and data on end-use activity in some sectors have continued to improve.

Interestingly, this rally has mainly been in copper, and to a lesser extent aluminium, reflecting the size of short positioning in those markets and also the more encouraging fundamental signals in the case of copper.

On the copper mine supply side, there were several developments of note over the past week.

–First, Rio Tinto stated that it expects final approvals from the Mongolian government to start shipments from its Oyu Tolgoi copper mine in the next few weeks. This follows protracted negotiations between the two parties that had raised concerns about the project time line. The mine is expected to produce 70Kt this year before ramping up to close to 200Kt by 2015.

–The Collahuasi mine’s production in Chile is expected to recover this year to potentially as high as 400Kt as mine worker announced their negotiations.

–Finally, Barrick Gold and Antofagasta announced they have given up on their Reko Diq copper-gold project in Pakistan.

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Source: Commodity Online