Forexpros — Copper futures were down sharply on Tuesday, snapping a five-day rally as some profit taking emerged ahead of a vote by Slovakia on expanding the powers of the euro zone’s bailout fund later in the day, while concerns over a slowdown in Chinese demand also weighed.
On the Comex division of the New York Mercantile Exchange, copper futures for December delivery traded at USD3.283 a pound during European morning trade, tumbling 2.53%.
It earlier fell by as much as 2.8% to trade at USD3.269 a pound, the lowest price since October 7.
Copper prices rallied nearly 11% since hitting a 14-month low of USD2.998 a pound on October 4, as renewed optimism that European policy makers will take action to tackle the region’s debt crisis buoyed prices.
However, the rally prompted some investors to sell their position and lock in gains ahead of a closely-watched vote by Slovakia on expanding the powers of the euro zone’s EUR440 billion bailout fund.
The country is the last of the 17-member bloc to vote on the EFSF, which needs to be approved by all euro zone states for it to go active.
The Freedom and Solidarity Party, led by Parliamentary Speaker Richard Sulik, previously said his party will not support boosting the EFSF if its conditions are not accepted by coalition partners.
Prime Minister Iveta Radicova said earlier that the vote on the fund will also be a vote of confidence in the government, the Associated Press reported.
The U.S. dollar advanced against most of its major counterparts, as risk appetite weakened ahead of the vote. The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.3% to trade at 78.10.
Copper prices came under additional pressure amid concern muted buying in the Chinese physical market may signal a slowdown in demand from the world’s largest copper consumer, according to U.K. lender Barclays.
Official Chinese import and export figures for September are scheduled for release on October 13.
Elsewhere on the Comex, gold for December delivery slumped 0.42% to trade at USD1,663.75 a troy ounce, while silver for December delivery fell 0.64% to trade at USD31.77 a troy ounce.
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