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Copper Drops on Stronger Dollar as U.S. Fed Scales Down Stimulus

December 19, 2013

Dec. 19 (Bloomberg) -- Copper capped the biggest loss in three weeks in New York after the Federal Reserve trimmed its stimulus, boosting the dollar and reducing the appeal of commodities as an alternative investment.

The Fed said yesterday it plans to cut its monthly bond buying to $75 billion from $85 billion. The Bloomberg U.S. Dollar Index, which tracks the greenback against 10 major peers, rose for a third day, heading for the longest rally since Nov. 1. Gold dropped below $1,200 an ounce for the first time since June today, while silver futures fell as much as 4.8 percent.

"We’re getting dragged down by this dollar strength, and a little bit of a move in sympathy with gold and silver today," Frank Lesh, a trader at FuturePath Trading in Chicago, said by telephone. "The dollar strength is not good for copper and base metals. That’s really what the pressure is."

Copper futures for delivery in March fell 0.7 percent to settle at $3.2955 a pound at 1:18 p.m. on the Comex in New York, the biggest decline since Nov. 27. The metal is down 10 percent this year.

On the London Metal Exchange, copper for delivery in three months dropped 1 percent to $7,200.50 a metric ton ($3.27 a pound).

Copper canceled warrants, or orders to remove the metal from LME warehouses, slumped for an eighth session to 253,250 tons, the lowest since Oct. 22.

Zinc, aluminum, lead and tin also fell in London.

Nickel for delivery in three months on the LME climbed for a third day, rising as much as 0.6 percent.

 

--Editors: Thomas Galatola, Millie Munshi

 

To contact the reporters on this story: Agnieszka Troszkiewicz in London at atroszkiewic@bloomberg.net; Luzi Ann Javier in New York at ljavier@bloomberg.net

 

To contact the editor responsible for this story: Millie Munshi at mmunshi@bloomberg.net

 

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