Copper prices fell the most in a week on concern that Europe’s debt will mount, hampering the global economy and curbing demand for industrial metals.
Former Federal Reserve Chairman Paul Volker said Greece’s fiscal woes may cause the breakup of the euro area after an unprecedented $1 trillion bailout. Equity and commodity markets have slumped in the past two weeks.
“People are spooked by the situation in Europe,” said Michael Gross, an analyst at OptionSellers.com in Tampa, Florida. “The uncertainty and fear is causing liquidation. There’s a ‘Get small’-mentality that’s causing investors to sell their hard assets.”
Copper futures for July delivery dropped 9.75 cents, or 3 percent, to $3.134 a pound on the Comex in New York. That marks the biggest drop for a most-active contract since May 4. The metal is down 0.3 percent this week.
Prices also dropped as the dollar’s rally reduced demand for commodities as alternative assets. The greenback rose as much as 1.2 percent against a basket of major currencies, heading for the fourth straight week of gains.
“The stronger dollar and a fresh bout of risk aversion are likely to be largely responsible for declines in prices” of metals, said Daniel Major, an analyst at Royal Bank of Scotland Group Plc in London.
Copper for delivery in three months fell 3.3 percent to $6,926 a metric ton ($3.14 a pound) on the London Metal Exchange.
Also on the LME, lead prices tumbled 6.1 percent to $1,940 a ton. The metal has dropped for three weeks in a row, the longest string of declines since February. Nickel dropped 5.4 percent to $21,555 a ton. That caps a weekly loss of 4.4 percent and follows a 14 percent plunge last week.
Aluminum for three-month delivery on the LME fell 3.2 percent to $2,101 a ton, the biggest drop since May 4. Zinc lost 4.9 percent to $2,055 a ton, and tin was down 1.4 percent to $17,550 a ton.