Copper futures slipped below $3 on Thursday as some investors cast doubt on the global economic recovery. The industrial metal has enjoyed a double-digit rally over the last three months, but prices are on track for a steep weekly loss. With foreign demand waning amid disappointing economic data, is copper in store for a correction?
October copper futures tumbled $0.03, or 1.00%, to $2.963 per pound at 16:50 GMT on Thursday on the New York Mercantile Exchange. The red metal is on track for a weekly loss of nearly 4%, but it is still up close to 6% year-to-date.
On Wednesday, IHS Markit released a few purchasing managers’ index (PMI) readings that tested contraction territory – anything below 50 indicates a contraction. This month, the manufacturing PMI rose to 53.7, the services PMI plunged to 47.6, and the composite PMI slumped to 50.1. The eurozone is one of the biggest markets for copper, so a lackluster recovery in the post-coronavirus economy could impact the industrial metal.
The US economic recovery is also occurring at a slower than expected pace. The IHS Markit manufacturing PMI rose slightly to 53.5, the services PMI dipped to 54.6, and the composite PMI dropped to 54.4. The US is the world’s second-largest copper market, behind China, which has seen enormous import levels of the industrial metal as the country rejuvenates its stockpile.
A strengthening greenback is also weighing on copper prices. The US Dollar Index, which gauges the greenback against a basket of currencies, was unchanged on Thursday at 94.39. The index is poised for a weekly surge of about 1.55%, paring its YTD decline to just above 2%. A stronger buck is bad for commodities priced in dollars because it makes it more expensive for foreign investors to purchase.
In other metal markets, December gold futures tacked on $3.60, or 0.19%, to $1,872.00 per ounce. November silver futures tumbled $0.195, or 0.84%, to $22.91 per ounce. November platinum futures fell $4.40, or 0.52%, to $838.60 per ounce. November palladium futures shed $26.10, or 1.16%, to $2,232.20 per ounce.