Copper futures fell to the lowest in almost three weeks after a report showing stronger-than expected U.S. economic growth last quarter bolstered speculation that the Federal Reserve will start to slow stimulus next month.
Gross domestic product rose at a 2.5 percent annualized rate, compared with an initial estimate of 1.7 percent and a 2.2 percent forecast by economists in a Bloomberg survey. The Fed will decide to pare its $85 billion-a-month bond-buying at a Sept. 17-18 meeting, according to 65 percent of economists in a separate Bloomberg survey. The Bloomberg U.S. Dollar Index, which tracks the greenback against 10 currencies, rose the most in a week, curbing the appeal of metals as alternative assets.
“Any numbers showing positive growth like this reinforce the idea that tapering will be a reality sooner rather than later,” Frank Cholly, a senior commodities broker at RJO Futures in Chicago, said in a telephone interview. “Copper is also backing off with the dollar rebounding.”
Copper futures for delivery in December fell 1.5 percent to settle at $3.2605 a pound at 1:18 p.m. on the Comex in New York, after touching $3.256, the lowest for a most-active contract since Aug. 9.
“Decent economic data encourages tapering talk and resultant market declines, and visa-versa,” Michael Turek, a senior director at Newedge Group SA in New York, said by e-mail. “The underlying, complicated macroeconomic situation is unsettling for the markets.”
Stockpiles monitored by the London Metal Exchange rose 0.5 percent to 577,675 metric tons, daily exchange figures showed. Orders to remove the metal from warehouses slid for an 11th straight session to 280,050 tons.
On the LME, copper for delivery in three months dropped 1.9 percent, the most this month, to $7,153 a ton ($3.24 a pound).
Nickel, tin, aluminum, lead and zinc also slumped.