LONDON: Copper prices stumbled on Tuesday on persistent worries about economic growth after weak U.S. data and on bearish technical signals that encouraged speculators to sell.
Three-month copper on the London Metal Exchange eased 0.2% to $8,321 a metric ton in official open-outcry trading after rising by 1.2% on Monday.
“The weak data we had from the U.S. yesterday indicates the U.S. economy (is) finally starting to show some signs of weakness,” said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.
“If you have a macroeconomic focus when you make your investment decisions, you’re probably sitting on the fence right now, or if anything, maybe holding a small short.”
Data on Monday showed the U.S. services sector barely grew in May as new orders slowed, pushing a measure of prices paid by businesses for inputs to a three-year low.
Speculative short sellers have regained the upper hand after LME copper failed to break above the key technical level of the 200-day moving average over the past two days, he added.
Copper under pressure from demand worries and dollar
“The bounce we have seen so far has been a weak bounce within a downtrend,” Hansen said.
Copper has rebounded about 6% since touching the lowest in nearly six months on May 24.
In Shanghai, copper prices briefly hit their highest in nearly four weeks, partly on hopes that China will announce more economic support measures that will boost metals demand.
Some investors were sceptical about China after optimism earlier in the year led to disappointment when demand failed to rebound strongly, Hansen added.
Among other metals, LME aluminium dropped 1.1% in official activity to $2,218.50 a metric ton, while nickel climbed 1.1% to $21,125, zinc rose 0.3% to $2,296, lead was unchanged at $2,028 and tin gained 0.5% to $25,700.
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