Copper futures in New York fell after the dollar rebounded, eroding demand for commodities as alternative investments.
The greenback gained as much as 0.4 percent against a basket of six major currencies after touching the lowest level in eight months. The Reuters/Jefferies CRB Index of 19 raw materials fell for the first time in seven sessions, led by declines in sugar, natural gas and corn. Yesterday, copper prices in London reached a 26-month high as inventories dropped.
“The dollar is putting a bit of pressure on copper,” said Michael Gross, an analyst at OptionSellers.com in Tampa, Florida. “Bulls may think this is the right time to take profit.”
Copper futures for December delivery dropped 1 cent, or 0.3 percent, to close at $3.6515 a pound at 1:25 p.m. on the Comex in New York. The metal is up 24 percent in the three months ended today, the largest quarterly gain in a year.
“The market is due for a nice, little correction over the next couple of days,” said Michael K. Smith, the president of T&K Futures & Options in Port St. Lucie, Florida. Copper probably will resume the rally next week and may reach $4 by Dec. 31 on rising demand from China, India and Brazil, he said.
Stockpiles tracked by the London Metal Exchange fell for the fourth straight day to the lowest level since Nov. 4. Inventories are down 26 percent this year, on course for the first annual contraction since 2004.
“The structural constraints of the supply side of the market are getting increasingly evident and imply a challenging outlook ahead,” Laredo, Texas-based researcher Harbor Intelligence said in a report. “Fundamental, technical and cyclical analyses point out that the underlying picture of the market will be bullish for a while.”
On the LME, copper for delivery in three months fell $50, or 0.6 percent, to $8,014 a metric ton ($3.64 a pound). Yesterday, the price reached $8,075, the highest level since Aug. 1, 2008.
Zinc, lead and tin also fell in London. Aluminum and nickel rose.
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