Copper dropped for the first time in three sessions in New York on speculation that U.S. policy makers will struggle to reach agreement on raising the nation’s debt limit, threatening growth and demand prospects.
The budget accord passed by Congress this week won’t cut deficits enough to avoid a sovereign-rating downgrade, Moody’s Investors Service said. Congressional Republicans and the White House may clash over spending, starting with a debate about raising the country’s $16.4 trillion debt ceiling next month. Copper rose the most in more than three months yesterday, after the budget deal was reached on Jan. 1.
“In the big picture, all they did was kick the can down the road, and they’re probably not going to get another majority to agree on spending cuts,” Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago, said in a telephone interview. “The markets were way too jubilant yesterday.”
Copper futures for delivery in March slid 0.5 percent to settle at $3.717 a pound at 1:19 p.m. on the Comex in New York.
The metal also declined as the dollar rose to its strongest level in almost three weeks against the euro, reducing the appeal of commodities as alternative investments.
On the London Metal Exchange, copper for delivery in three months declined 0.5 percent to $8,164 a metric ton ($3.70 a pound).
Lead, zinc, aluminum, nickel and tin also fell in London.