LONDON: Copper edged down on Tuesday as investors locked in some profits from recent gains after progress in negotiations to avert the US fiscal cliff that could send the world's biggest economy into recession.
The prospect of a deal to head off automatic spending cuts and tax hikes may already be partly priced into the copper market, which has gained about 6 percent since mid-November, compared with falls of about 1 percent in spot gold and 2.5 percent in Brent crude oil.
Many markets rallied as news emerged on Monday night that differences over resolving the fiscal cliff narrowed significantly as President Barack Obama made a counter-offer to Republicans that included a major change in position on tax hikes for the wealthy.
But three-month copper on the London Metal Exchange slipped 0.4 percent to $8,026 per tonne by 1138 GMT, giving up gains earlier in the session. Copper closed nearly flat on Monday.
The most-traded March copper contract on the Shanghai Futures Exchange slipped 0.43 percent to close at 57,880 yuan ($9,300) a tonne.
"The equities reacted favourably last night to this in New York and logically one would assume that this would be a positive for commodities as well," said Stephen Briggs, metals strategist at BNP Paribas in London.
"But because base metals have been faring pretty well in the last few weeks, there may be less mileage for them, than there might be for some other sectors."
Copper has also been boosted in recent weeks on signs of a revival in economic growth in top consumer China, which accounted for 40 percent of refined demand last year.
Further support was expected following the approval on Monday by US regulators of JPMorgan Chase & Co's controversial plan to launch a copper exchange-traded fund backed by actual metal stockpiles.
Stocks for the ETF will be held in non LME-registered warehouses, where costs are cheaper, with Shanghai one of the suggested locations.
"You'd at least start to think that some of the worries about Chinese stockpiles are going to be reduced," said senior strategist Nick Trevethan of ANZ.
Copper stocks in China's bonded warehouses hit a record high of more than 1 million tonnes in November, and inventories are expected to rise by around 100,000 tonnes by the end of the year due to weak domestic demand, traders said.
**
Comments
Comments are closed.