Copper futures fall from 3-month high after China flash PMI data
Copper prices fell from the previous session’s three-month high on Tuesday, after data showed that Chinese manufacturing activity swung into contraction territory this month, underlining concerns over the health of the world’s second largest economy.
On the Comex division of the New York Mercantile Exchange, copper for May delivery traded at $2.804 a pound during European morning hours. Prices rallied to $2.914 on Monday, the most since December 15.
Futures were likely to find support at $2.645, the low from March 20, and resistance at $2.914, the high from December 15.
Data released earlier showed that the preliminary reading of China’s HSBC (LONDON:HSBA) manufacturing index dropped to an 11-month low of 49.2 in March, as new orders plunged.
Analysts had expected a reading of 50.6, down slightly from February’s reading of 50.7.
Copper traders consider shifts in the HSBC PMI an indicator of China’s copper demand, as the industrial metal is widely used by the sector.
Losses were limited as the disappointing data fuelled speculation policymakers in Beijing will have to introduce further stimulus measures to boost growth and spur economic activity.
The Asian nation is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.
Elsewhere on the Comex, gold futures for April delivery dipped 70 cents, or 0.06%, to trade at $1,187.00 a troy ounce, while silver futures for May delivery shed 0.3 cents, or 0.02% to trade at $16.88 an ounce.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.1% to 97.10 early on Tuesday.
The greenback remained under pressure amid uncertainty over the path of U.S. monetary policy after the Federal Reserve downgraded its forecasts for growth and inflation and lowered its interest rate projections last week.
Later in the day, the U.S. was to release reports on consumer inflation and new home sales as investors look for more clues over the strength of the economy.