Forexpros – Copper futures tumbled to an eight-day low on Monday, as investors dumped riskier assets after last week’s European Union summit failed to ease concerns over the region’s ongoing debt crisis.
On the Comex division of the New York Mercantile Exchange, copper futures for March delivery traded at USD3.472 a pound during European morning trade, tumbling 2.4%.
It earlier fell by as much as 2.68% to trade at USD3.462 a pound, the lowest since November 30.
All European Union countries except the U.K. agreed on Friday to pursue stricter budget rules and to provide up to EUR200 billion in loans to the International Monetary Fund to assist euro zone countries with debt problems.
However, markets remained cautious as the new fiscal union was not viewed as the decisive move needed to resolve the euro zone’s debt woes.
Speculation that S&P will carry out a mass downgrade of 15 euro zone members, including Germany, France, Italy and Spain dampened appetite for riskier assets. The ratings agency said last week that it would announce any ratings changes “as soon as possible” after Friday’s summit.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, rallied 1% to trade at 79.92, the highest since October 6.
Europe as a region is second in global demand for the industrial metal and worries over its economic growth have kept copper prices under pressure in recent weeks.
Copper prices came under further pressure after official data released earlier showed that industrial production in India tumbled 5.1% from a year earlier in October. It was the first drop in industrial output since June 2009.
The report came after data on Friday showed that Chinese industrial production rose 12.4% in November, the slowest pace since August 2009.
The downbeat data dampened sentiment on the industrial metal as it is sensitive to the economic growth outlook due to its widespread uses across industries.
China is the world’s largest copper consumer, accounting for almost 40% of world consumption last year, while India is forecast to become the second largest consumer by 2020.
Elsewhere on the Comex, gold for February delivery tumbled 1.75% to trade at USD1,686.75 a troy ounce, while silver for March delivery sank 2.35% to trade at USD31.49 a troy ounce.
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