Forexpros – Copper futures fell on Wednesday, retreating from a three-week high as lingering concerns over the euro zone’s debt crisis and fears over a slowdown in demand from top consumer China weighed.
On the Comex division of the New York Mercantile Exchange, copper futures for March delivery traded at USD3.490 a pound during European morning trade, tumbling 1.1%.
It earlier fell by as much as 1.45% to trade at a session low of USD3.475 a pound.
Investors turned cautious as Germany’s Treasury was set to auction EUR5 billion of 10-year government bonds later in the day.
Adding to nervousness, data released earlier in the day showed that the use of the European Central Bank’s overnight deposit facility reached a new all-time high of EUR453.1 billion on Tuesday.
The report underlined concerns over region’s banking sector, as euro zone lenders increasingly turn to the ECB as a safe-haven for extra funds.
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 after Chinese Premier Wen Jiabao said China faced “relatively difficult” business conditions in the first quarter of 2011, as inflation stays elevated and overseas demand weakens. He added that monetary policy will be fine-tuned as needed.
China is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.
On the fundamental side, Peru’s mining ministry said on Tuesday that the country’s copper output rose 5.8% in November from the same month a year earlier to 110,458 metric tons.
Peru is the world’s second largest copper producer, trailing only Chile.
Copper futures rallied to a three-week high on Tuesday as encouraging economic data from the U.S., Germany and China renewed optimism in the global economic outlook and sparked a broad-based rally in the commodities complex.
Elsewhere on the Comex, gold for February delivery rose 0.3% to trade at USD1,605.75 a troy ounce, while silver for March delivery slumped 0.65% to trade at USD29.37 a troy ounce.
Forexpros
