Forexpros – Copper futures were sharply lower on Wednesday, adding to losses after Spain saw borrowing costs rise at a poorly-received bond auction and as minutes from the Federal Reserve’s most recent policy meeting suggested the bank was less likely to embark on a third round of monetary easing.
On the Comex division of the New York Mercantile Exchange, copper futures for May delivery traded at USD3.854 a pound during European morning trade, tumbling 1.65%.
It earlier fell by as much as 1.7% to trade at a two-day low of USD3.853 a pound.
Copper’s losses accelerated after Spain’s Treasury sold EUR2.59 billion of medium-and-long-term bonds earlier in the day, much less than targeted.
The country sold EUR489 million of eight-year bonds at an average yield of 5.33%, up from 5.15% at a similar auction last month. Spain also auction EUR973 million in four-year bonds at a yield of 4.31%, up sharply from 3.37% last month.
There have been renewed concerns of further debt contagion in the euro zone in recent weeks amid fears over the fiscal health of Spain and Portugal.
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 were on the defensive before the weak Spanish bond sale after minutes released Tuesday from the March meeting of the Fed’s Open Market Committee indicated that the central bank was unlikely to introduce more stimulus measures to help boost the U.S. economy in the near term.
In their discussion of the economy at the meeting, Fed officials thought that the economy was a “bit stronger” but not in a meaningful way.
Stock markets, commodities and growth-linked currencies all fell after the minutes were released, while the dollar spiked higher, as markets interpreted the comments as meaning the Fed was less likely to purchase new securities.
The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, was up 0.34% to trade at 79.81, the highest since March 26.
Later this week, attention will turn to U.S. non-farm payrolls data, which could shed further light on the strength of the U.S. economy and the need for further monetary easing in the U.S.
Trading was thin during the Asian session, with markets in mainland China and Hong Kong shut for a public holiday.
Zhang Xiaoqiang, vice minister of China’s National Development & Reform Commission said earlier that the Asian nation’s economy was set to grow 8.4% in the first quarter from a year earlier.
Xiaoqiang, who said the figures were preliminary and based on research, added that consumer prices for the quarter likely rose about 3.5%.
China is set to release official statistics on the size of its economy on April 13, and on consumer prices April 9.
China is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.
Elsewhere on the Comex, gold for June delivery tumbled 2.45% to trade at USD1,630.75 a troy ounce, while silver for May delivery plunged 3.9% to trade at USD31.96 a troy ounce.
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