Copper futures tumbled the most in five weeks on mounting speculation that the Federal Reserve will ease economic stimulus and on concern the U.S. is moving closer to a military strike on Syria.
Fed policy makers said in meeting minutes released Aug. 21 that they support a plan to curb bond buying this year if the economy improves. U.S. manufacturing reached a two-year high in data released yesterday, and Toyota Motor Corp., Ford Motor Co. and Chrysler Group LLC reported U.S. sales gains for August today. The Fed will release an economic outlook survey today, while a Senate panel votes on limited strikes against Syria.
“The Fed and questions around Syria present markets with a lot of uncertainty, and markets hate uncertainty,” Michael Smith, the president of T&K Futures & Options in Port St. Lucie, Florida, said in a telephone interview. “We’ve seen a lot of good economic data lately, but until some of these issues are clarified, traders are going to wait on the sidelines.”
Copper futures for delivery in December fell 1.9 percent to settle at $3.241 a pound at 1:15 p.m. on the Comex in New York, the biggest drop since July 30. Prices are down 11 percent this year.
On the London Metal Exchange, copper for delivery in three months lost 1.7 percent to $7,124 a metric ton ($3.23 a pound).
Prices also retreated as stockpiles monitored by the LME increased, said Kazuhiko Saito, an analyst at commodities broker Fujitomi Co. in Tokyo. Inventories gained for a fifth session to 603,900 tons, the highest since Aug. 6, according to daily exchange data.
The copper market’s surplus will widen to 500,000 tons in 2015 from 392,000 next year, Max Layton, an analyst at Goldman Sachs Group Inc., said in a report yesterday. The metal will trade at $6,600 in 12 months, according to the bank.
Aluminum, lead, nickel and zinc also dropped in London. Tin rose.