Copper futures fell to a two-week low on Thursday, after data showed that consumer price inflation in China slowed to a seven-month low in December.
On the Comex division of the New York Mercantile Exchange, copper futures for March delivery traded at USD3.312 a pound during European morning trade, down 0.9%. Comex copper prices fell by as much as 1% earlier to hit a session low of USD3.309 a pound, the weakest level since December 24.
The March contract ended Wednesday’s session 0.51% lower to settle at USD3.342 a pound. Copper prices were likely to find support at USD3.304 a pound, the low from December 24 and resistance at USD3.377 a pound, the high from January 8.
Data released earlier showed that consumer price inflation in China slowed to a seven-month low of 2.5% in December from 3% in November, while producer prices fell 1.4% from a year earlier.
The Asian nation is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.
Investors now turned their attention to Fridays’ U.S. nonfarm payrolls report for indications on the timing of further reductions to the pace of the Federal Reserve’s stimulus program.
Wednesday’s minutes of the Fed’s December meeting showed that the central bank cited a stronger labor market in its decision to cut its asset purchase program by USD10 billion, reducing it to USD75 billion-a-month.
The minutes also showed that officials were keen to stress that further reductions were not on a “preset course” and would be undertaken in “measured” steps.
The minutes came on the heels of a report showing that the U.S. private sector added the largest number of jobs since November 2012 last month. ADP nonfarm payrolls rose by 238,000 in December, easily surpassing expectations for an increase of 200,000.
Some market participants believe the central bank will likely taper its bond purchases by an additional USD10 billion in each of its next seven meetings before ending the program in December 2014, amid indications of an improving U.S. economy.
The U.S. is second behind China in global copper demand. The Fed’s stimulus program is viewed by many investors as a key driver in boosting the price of commodities as it tends to depress the value of the dollar.
Elsewhere on the Comex, gold for February delivery added 0.1% to trade at USD1,226.60 a troy ounce, while silver for March delivery inched up 0.05% to trade at USD19.54 a troy ounce.
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