Copper futures fell to their lowest levels in about a week on Monday, driven mostly by the resurgence in coronavirus cases and a rising US dollar. The industrial metal has rallied close to 3% this month, topping $3 and making it on track to test $3.25 by year’s end. But while China’s economic rebound is facilitating the red metal’s rally, the US bracing for the second wave of COVID-19 and a surging greenback are hurting prices.
December copper futures tumbled $0.0415, or 1.33%, to $3.0875 per pound at 19:51 GMT on Monday on the New York Mercantile Exchange. Copper prices are coming off a 1.4% weekly gain, adding to their year-to-date jump of 11%. But the industrial metal is trading at a one-week low.
The global coronavirus pandemic continues to weigh on the broader financial market. For two straight days, the US recorded a record number of new COVID-19 cases. North of the border, Canada reported a record number of new confirmed cases in a day. In Europe, Spain introduced a new state of emergency, while Italy mandated bars and restaurants to shut down by 6 p.m.
As a result of the latest developments in the public health crisis, copper and international markets could face some headwinds to close out the year.
The other factor that could impact copper prices could be the projected deficit. According to the International Copper Study Group, the international refined copper market highlighted a deficit of 255,000 tons in July, down from the 351,000-ton deficit in June.
In addition to higher copper imports, China has witnessed a surge in buying activity for the copper scrap market.
Meanwhile, the greenback is affecting copper and the broader metals market. The US Dollar Index, which measures the greenback against a basket of currencies, advanced 0.32% to 93.07, from an opening of 92.76. A stronger buck is bad for commodities priced in dollars because it makes it more expensive for foreign investors to purchase.
In other metal commodities, December gold futures dipped $1.20, or 0.06%, to $1,904.00 per ounce. December silver futures shed $0.26, or 1.05%, to $24.415 per ounce. December platinum futures plunged $31.70, or 3.5%, to $875.00 an ounce. December palladium futures declined $27.50, or 1.15%, to $2,371.10 an ounce.