Copper Retests $3 As Investors Wait for Chinese Manufacturing Data

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Copper futures are looking to test $3 again as investors brace for China’s manufacturing data. In the meantime, a weaker US dollar and rising copper inventories gave the industrial metal some direction on Tuesday. Despite topping $3.10 earlier this month, copper prices have slipped below $3.

December copper futures dipped $0.0095, or 0.3%, to $2.9815 per pound at 15:44 GMT on Tuesday on the New York Mercantile Exchange. Copper prices have slumped about 3% over the last week, adding to their month-to-date decline of 1.5%. Year-to-date, the red metal is up more than 6%.

On Wednesday, the government and private-sector manufacturing and non-manufacturing purchasing managers’ index (PMI) readings will be released. Analysts are expecting sluggish growth – anything above 50 indicates expansion. The services and composite PMI figures will be published on Thursday.

Over the weekend, it was reported that year-to-date industrial profits fell at an annualized rate of 4.4% in August, up from the 8.1% drop in July.

copper pipes in warehouseCopper inventories at London Metal Exchange-monitored warehouses surged 40% to 136,325 tons. Last week, stockpiles at these facilities plunged to a 15-year-low of 76,325 tons. The industry is not too worried about deliveries, which has diminished concern over supplies on the LME market. Therefore, the premium for a three-month copper contract has turned into a discount.

Although the greenback has witnessed a resurgence over the last month, the US dollar has been trending lower in recent sessions. The US Dollar Index, which measures the greenback against a basket of currencies, tumbled 0.29% to 94.00 on Tuesday. Despite its 2% rally in September, the currency is still down 2.5% year-to-date. A weaker buck is good for commodities priced in dollars because it makes it cheaper for foreign investors to purchase.

In other metal markets, December gold futures surged $14.299, or 0.7597%, to $1,896.60 per ounce. December silver futures tacked on $0.561, or 2.38%, to $24.165 per ounce. December platinum futures dipped $0.20, or 0.02%, to $891.20 an ounce. December palladium futures soared $60.80, or 2.68%, to $2,332.30 per ounce.

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