Copper Falls Most In 6 Weeks As Metal Rally Starts To Give

After a robust rally, metal prices are starting to pull back.

Copper, aluminum, zinc, lead and nickel retreated on Tuesday as investors focused on the dollar and evidence of ample supply in the physical market. Palladium also retreated, while spot silver fell as much as 3.2%.

[ibd-display-video id=3086072 width=50 float=left autostart=true] "We've had a significant rally across base metals, and it's hard to justify a further move higher at these levels," Warren Patterson, a commodities strategist at ING Groep NV, said by phone from Amsterdam. "There's probably a fair bit of profit-taking going on."

Metals have been on a tear since May as enthusiasm over growth in China and demand from electric vehicles brought in new investors. The rally sent copper above $7,000 a metric ton for the first time in three years and palladium to a record.

Copper dropped 1.8% to settle at $7,078 a ton on the London Metal Exchange Tuesday, marking the biggest drop since Dec. 5. Rising stockpiles this year and LME spot prices trading below futures suggest that buyers aren't rushing to secure copper as factories ramp up.

The metal advanced 7.2% in December, capping the biggest annual gain in eight years, but has started to retreat this month. Prices are down 2.3% so far in 2018.

Some analysts see the rally resuming. HSBC Holdings has raised its copper price forecast, responding to a recent slump in the dollar and rebounding factory-output growth that's lending support across commodity markets in recent weeks.

Aluminum slid 1.7% to $2,189 a ton as investors in China focused on bloated inventories and rising output in Xinjiang. Nickel dropped 2.4% to $12,545 a ton, leading base metals lower. Tin advanced in London.

The Bloomberg World Mining index was down 1.3% as of 2:40 p.m. ET in New York.

Palladium futures declined 1.6% to $1,088.15 an ounce on the New York Mercantile Exchange, after extending a rally to a record $1,133 earlier Tuesday.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.