Markets

Copper trades at 3-week low as China jitters, stronger dollar weigh

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Shutterstock photo

Shutterstock photo

Investing.com -

Investing.com - Copper futures traded near a three-week low on Wednesday, as fresh concerns about China's credit supply and ongoing strength in the U.S. dollar hurt sentiment.

On the Comex division of the New York Mercantile Exchange, copper for December delivery dipped 0.09%, or 0.3 cents, to trade at $3.099 a pound during European morning hours.

A day earlier, copper prices tumbled 6.6 cents, or 2.1%, to settle at $3.102 a pound.

Futures were likely to find support at $3.080, the low from August 14 and resistance at $3.187 a pound, the high from September 9.

Chinese Premier Li Keqiang said on Tuesday that the country's money supply grew by 12.8% in August, slower than July's 13.5% growth and below expectations for an expansion of 13.4%.

The weak credit data underlined concerns about slowing growth in the world's biggest consumer of the industrial metal.

Official trade data released on September 8 showed that China's copper arrivals fell 12% from a year earlier in August, due to the fallout from a government investigation into metal financing at Chinese ports.

China is the world's largest copper consumer, accounting for nearly 40% of global demand.

Meanwhile, the U.S. dollar index, which tracks the performance of the greenback against a basket of currencies, rose to a 15-month high of 84.33 early Wednesday.

The dollar remained well bid after a study by the San Francisco Fed suggested that investors' expectations for rate hikes lag those of the Fed.

A stronger U.S. dollar usually weighs on copper, as it dampens the metal's appeal as an alternative asset and makes dollar-priced commodities more expensive for holders of other currencies.

The greenback has rallied in recent weeks amid expectations that the Federal Reserve may announce a rate increase earlier than expected after economic data indicated that the recovery in the U.S. is progressing strongly.

Elsewhere on the Comex, gold for December delivery tacked on 0.7%, or $8.80, to trade at $1,257.30 a troy ounce, while silver for December delivery picked up 1.01%, or 19.2 cents, to trade at $19.11 an ounce.

Gold regained strength as investors returned to the market to seek cheap valuations after prices fell to the lowest level in three months on Tuesday.

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