Copper prices slipped on Thursday, weighed down by a strong dollar, although further falls were capped by support from monetary easing in top consumer China and an upturn in economic sentiment in Europe while a strong dollar capped gains. Three-month copper on the London Metal Exchange, untraded at the close, was bid at $6,555 a tonne, down 0.2 percent, having earlier touched its lowest since November 5 at $6,550 a tonne.
"The big scare is that copper may close the month below $6,600. If it closes below that level, then there's higher risk of a crash to $6,000," said Gianclaudio Torlizzi, partner at consultancy T-Commodity in Milan. "So we are now on the edge. I don't see the real economy conditions so bad, but sentiment might turn worse if that big level is taken away. We're in a holding pattern." Putting pressure on prices, the dollar rose against a basket of currencies, making commodities priced in the US unit more expensive for holders of other currencies.
China's central bank refrained from draining funds from the money market on Thursday, the first time it had held off from open market operations in four months. Also supporting the market was data showing morale in the euro zone rose for the second straight month in November and Germany's jobless rate hit a record low, offering tentative signs the bloc is avoiding outright stagnation. Sentiment in China was cautious, said Macquarie analyst Vivienne Lloyd, who recently returned from a visit to Shanghai.
"We were told that several of the smaller consumers had gone under due to cashflow problems and that some of the smaller traders were also finding conditions tough," she told the Reuters Global Base Metals Forum. "People tended to be fairly bearish about next year and the construction sector in particular was held up as a weak area." In other metals, aluminium fell 0.8 percent to close at $2,044 a tonne. The cost to roll forward an LME aluminium position by one day, also known as the tom-next spread hit $10 a tonne, its highest level since late August.
Nickel closed almost flat at $16,355 a tonne. Nickel inventories continued to rise to touch another record peak on Thursday and broke through 400,000 tonnes for the first time. Zinc closed at $2,256 a tonne, down 0.8 percent and tin ended 0.1 percent lower at $20,250 a tonne. Lead, untraded at the close, was bid at $2,060 a tonne, down 0.1 percent.