Copper Falls for First Time in a Week on Stimulus BetsJoe Richter
Copper futures fell for the first time this week after Federal Reserve Bank of St. Louis President James Bullard said policy makers may start scaling back U.S. fiscal stimulus as early as next month.
The Fed’s Sept. 18 announcement on maintaining $85 billion in monthly bond purchases was a close call, and a “small” tapering may start in October, Bullard said today on Bloomberg Television’s “Bloomberg Surveillance” with Tom Keene. Copper gained 3.7 percent this week after the Fed unexpectedly maintained the stimulus pace, surprising investors who anticipated a cut.
“The comments just remind people that tapering is coming sooner or later,” Frank Lesh, a trader at FuturePath Trading in Chicago, said in a telephone interview. “Copper has had a good week, but we’re likely to see a lot of volatility as we get more policy makers speaking. All the moves are on taper expectations now.”
Copper futures for December delivery fell 0.8 percent to settle at $3.3205 a pound at 1:12 p.m. on the Comex in New York. Trading was 36 percent below the average in the past 100 days for this time, according to data compiled by Bloomberg.
The price climbed in the previous four days, the longest rally in five weeks. Yesterday, the metal reached a three-week high after the Fed said it wants to see more evidence that improvement in the U.S. economy will be sustained.
“Everything got a bit carried away after the unexpected Fed pause,” said Nic Brown, the head of commodity research at Natixis SA in London. “The market has to figure out why the Fed paused, and whether it was the right thing to do. That may take a little time.”
Ten traders and analysts expect copper to climb next week, eight were bearish and eight neutral, a Bloomberg survey showed. The metal has declined 9.1 percent this year.
On the London Metal Exchange, copper for delivery in three months dropped 0.7 percent today to $7,280 a metric ton ($3.30 a pound). Aluminum, lead, nickel, tin and zinc fell.