Forexpros – Copper futures fell to a one-week low on Thursday, adding to losses amid ongoing fears over the euro zone’s debt crisis following a disappointing auction of French government debt.
On the Comex division of the New York Mercantile Exchange, copper futures for March delivery traded at USD3.413 a pound during European morning trade, falling 0.61%.
It earlier fell by as much as 0.8% to trade at USD3.403 a pound, the lowest since December 20.
Concerns over the euro zone’s ongoing debt crisis intensified after a closely watched auction of French government bonds earlier in the day was met with lackluster investor demand.
France sold EUR4.02 billion of 10-year bonds at an average yield of 3.29%, compared with 3.18% at a similar auction last month. Bids exceeded the amount sold 1.6 times, down sharply from a bid-to-cover ratio of 3.1 in December.
France is viewed as being at high risk of losing its triple-A sovereign credit rating in the coming weeks, fuelling concerns that the region’s ongoing debt crisis will worsen.
Concerns over the health of the European banking sector also weighed on sentiment, boosting demand for the safe haven U.S. dollar and prompting investors to shun riskier assets such as industrial commodities.
The greenback strengthened to a 15-month high against the euro, while the dollar index was up 0.6% to trade at 80.86. A stronger dollar makes commodities more expensive for holders of other currencies.
Europe as a region is second in global demand for the industrial metal and worries over its economic growth have kept prices under pressure in recent months.
Prices came under further pressure from news that union workers at Freeport McMoran Copper & Gold’s Grasberg mine in Indonesia headed back to work following a three-month strike.
Union spokesman Virgo Solossa Wednesday that nearly 500 workers were transported to the mine and others would follow in the days ahead.
Grasberg is one of the world’s largest copper mines. In 2010, Freeport sold 1.2 billion pounds of copper from Grasberg.
Elsewhere on the Comex, gold for February delivery rose 0.23% to trade at USD1,616.35 a troy ounce, while silver for March delivery eased down 0.1% to trade at USD29.07 a troy ounce.
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