Strong dollar, poor Chinese data weigh on copper price

Copper and gold prices headed in opposite directions in the US on Thursday, October 13, although all commodities are under pressure from a multi-month high in the dollar.

Copper for December settlement on the Comex division of the New York Mercantile Exchange was last down 2.4 cents or 1.1% at $2.1525 per pound. Trade has ranged from $2.1510 to $2.1800.

Comex gold for December delivery rose $7.10 or 0.6% to $1,260.90 per oz – its highest since Friday. Trade has been confined to a narrow range between $1,254.70 and $1,263.50.

Chinese trade data showed its economy is slowing as the second half of the year progresses. China’s overall exports dropped 10% and imports slipped 1.9% in September, both on a year-on-year basis in dollar-denominated terms.

In trade data, China’s imports of unwrought copper and copper products fell 2.9% month-on-month and 26.1% year-on-year to 340,000 tonnes in September – this was also the sixth consecutive month-on-month decline.

“Most metal prices are falling this morning after China published September trade statistics that were disappointing on the whole,” Commerzbank said.

The release of the Federal Open Market Committee (FOMC) September meeting minutes showed that the central bank’s policy board is growing more hawkish.

Doves argued that weak foreign economic growth and inflation remaining persistently below 2% are the main reasons for keeping interest rates accommodative while hawkish members cited a robust labour market and diminished global risks as grounds to raise rates.

With a presidential elections coming days after the FOMC’s November meeting, December is now seen as the last realistic chance for the Fed to resume the normalisation of interest rates.

“With the US election less than a month away and a US rate rise also likely in the fourth quarter, the market has a lot to think about,” Metal Bulletin analyst William Adams said. “We feel investors will continue to want safe-haven cover in the months ahead so we expect this dip to be short-lived.”

The dollar index was recently at 98.07, just below an earlier seven-month high of 97.85. US data due later today includes unemployment claims and import prices.

In international markets, Germany’s DAX and France’s CAC-40 were down 1.1% and 1.3% respectively while the dollar softened by 0.3% to 1.1040 against the euro.

In other commodities, light sweet crude (WTI) oil futures on the Nymex ticked up two cents or 0.1% to $50.66 per barrel while Comex silver was last trading at $17.580 per oz, up 7.5 cents.

(Editing by Mark Shaw)

 

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