Comex copper ended sharply lower on Wednesday, in an abrupt reversal after nearing 8-year highs at the start, with traders saying the red metal's fate was tied to abrupt movements in the dollar.
"All the factors that tie into it, the dollar creamed gold, silver held, but then that gave way. Then copper gave way. It was a chain reaction," said Scott Meyers, a senior-trading analyst at Pioneer Futures.
Many investment funds have been drawn to hard assets like base metals in recent months. But, when the dollar rises, foreign investors lose their currency advantage on dollar-denominated assets like copper.
Benchmark March copper slid 1.75 cents to close at $1.3085 a lb. in a session range of $1.2950 to $1.3580, just short of the 8-year high at $1.3595 per lb.
May futures ended with a 1.60-cent loss at $1.3125, after reaching a new contract high at $1.3510. Spot February was marked 12.75 cents lower at $1.3080 a lb.
Prices across the board settled with 1.55 to 1.65 cents losses.
Comex estimated final copper volume at 43,000 lots, higher than on Tuesday's 35,194 lots.
Open interest rose by 4,625 lots to 89,394 contracts. Traders also pointed out that on Wednesday's action included heavy rollover trades out of the March contract into May, the new most-active months, as the March expiration approaches.
In London, London Metal Exchange 3-months copper closed the on Wednesday evening kerb at $2,953 per tonne, off its latest 8-1/2-year high of $2,980 but still $63 higher than on Tuesday's close.
The clearest indication that traders cite as reason to be bullish about copper is the increased demand implied by the incessant sharp declines in copper exchange inventories.
On Wednesday, LME copper warehouse stocks fell by 2,925 tonnes to 291,800 tonnes.
Comex inventories slipped by 850 short tons to 245,678 tons on Tuesday's daily data. Comex is a division of the New York Mercantile Exchange.
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