Benchmark copper futures eked out a modest gain on Friday, after upbeat US employment data helped calm commodity markets spooked into free fall on Thursday by fears of slowing growth in the world's No 1 economy. But gains were reversed in after-hours trade, as the US dollar extended gains against the euro and chatter of a Greek exit from the eurozone heightened concerns about the sustainability of the global recovery.
London Metal Exchange (LME) copper for three-month delivery rose $5 to end at $8,825 a tonne. The gains quickly evaporated in late New York trade, with the price dipping back down below $8,800. Sean Corrigan, chief investment strategist with Diapason Commodities Management said he believed prices could fall further toward $8,000 a tonne.
"I think that's a sensible sort of retracement target from this market. If it gets any worse than that then I think you are in trouble," he told Reuters. COMEX copper for July delivery fell 2.25 cents to settle at $3.9755 per lb, placing the contract below its 200-day moving average. "If we break below there and start closing below there, it's going to become a sell-the-rallies type of market," said Matthew Zeman, head of trading with Kingsview Financial in Chicago.
"Right now, it's still a buy-the-dips type of market." The day began with a generally upbeat US employment report that showed companies created jobs at the fastest pace in five years, pointing to underlying strength in the economy, even as the jobless rate rose to 9.0 percent. "It's a pretty good number, but we've always made the point that this is volatile," said Michael Shaoul, chairman of Marketfield Asset Management in New York.
Commodities across the complex showed signs of stabilisation after the US jobs data reassured investors who had been rattled by worries over global growth and days of sharp price falls. Barclays Capital said the sell-off in metals had been overdone, and presented investors with a new buying opportunity. "Those who do not choose to take advantage of this window are likely to be disappointed later," it said in a note.
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