Copper retreated from a 16-week high as some investors judged the rally to be exaggerated after a technical indicator approached a level signaling price drops.
The contract for delivery in three months on the London Metal Exchange declined as much as 0.8 percent to $6,966.50 a metric ton and was at $7,006 by 3:15 p.m. in Shanghai. The metal hit $7,028.5 yesterday, the highest price since March 7.
The commodity’s 14-day relative strength index advanced to 69 yesterday, the highest since September 2012 and near 70, a level signaling overbought conditions to traders who study historical price patterns. A manufacturing index for China from HSBC Holdings Plc and Markit Economics yesterday came in at 50.7 in June, missing analyst estimates.
“It looks to be a technical correction after recent gains,” said Yasuo Tanaka, general manager at Toyota Tsusho Metals Ltd. Japan Branch in Nagoya. “If the price fails to hold above $7,000, we may see further drops.”
Copper stockpiles monitored by the LME in Asia rose 5.2 percent yesterday, the most since September last year, to 13,175 tons, with reserves in South Korea up 23 percent, bourse data showed.
In New York, copper futures for delivery in September was little changed at $3.2005 a pound. The metal for September delivery on the Shanghai Futures Exchange slipped 0.1 percent to close at 50,320 yuan ($8,105) a ton.
On the LME, nickel and tin fell, while aluminum, zinc and lead were little changed.