COMEX copper prices fell Friday as a rising dollar prompted profit-taking by the funds, traders said.
"We've had fund profit-taking after the highs overnight," a desk trader said. "I think everything's being driven by the dollar rallying. That's what's putting base metals under pressure."
A stronger dollar makes material more expensive for overseas traders and investors.
At 10:31 am EST (1531 GMT), benchmark March copper was down 2.95 cents, or 2.2 percent, at $1.30 a lb, trading from $1.3390 to $1.2970. Spot February shed 2.40 cents to $1.3040 and deferreds dropped 1.50 to 2.85 cents.
Profit-taking hit copper after slight gains overnight, as dealers viewed the market as technically overbought after the recent scorching rally to 8-year highs fuelled by lessening supplies amid strong demand, especially in China.
March hit a contract peak at $1.3595 Wednesday, well above the 90 cents the metal fetched in early December.
The greenback climbed after the consumer price index, the most widely used gauge of US inflation, rose 0.5 percent in January after a 0.2 percent rise the month before.
That raised hopes the Federal Reserve may hike interest rates sooner than expected.
Higher interest rates bolster the dollar as they enhance the yields of such US assets as debt securities.
Copper inventories fell again. LME warehouse stocks dropped 5,425 tonnes to 303,325 tonnes on Friday. COMEX inventories fell 1,328 short tons to 249,168 short tons on Thursday.
The last time COMEX stocks were this low was December 2001, analysts pointed out.
Chart watchers peg resistance in March futures at $1.3595 and $1.45 then $1.65 which is the high from December 1988, with first support at $1.2550.
LME 3-months copper fell to $2,833 a tonne from $2,872 on Thursday.