Copper traded at near 4 year low after China reported slow economic growth.
China is the largest metals purchaser, consuming over 40% of the world’s copper. Chinese Q3 economic growth reports saw a fall to 7.3% which worried the investors. Copper is widely used in China’s manufactured goods and construction therefore economic slowdown could lead to less demand and further price drop for the metal.
China eased credit conditions and revised the GDP calculations in the attempt to support its economy but the market remained unimpressed.
Copper is currently trading at $2.8103, lowest since June 2010.
MT4 GRAPH: Copper
Copper was on a month-long rally in July this year, with highest at $3.25 a pound. However, the prices dropped as China reported slow growth in key areas of the economy such as manufacturing. The government made several attempts to boost the economy but traders showed little enthusiasm. In October, China announced its plan to extend loans of around $30 billion to the largest national banks in the attempt to boost lending – copper prices showed no reaction.
George Gero, senior vice president at RBC Capital Markets Global Futures said that generally, the mood in the copper market has been quite negative and that the price drop on Friday is not a good sign.
Ira Epstein, a strategist at the Linn Group said that the Friday drop in oil prices also put pressure on copper as traders sought to lighten positions in other commodities to cover losses in oil. Also, the funds were probably selling to close the losing positions before the end of the year.
Oil is currently trading at $55.37, gaining almost $1 since Friday when trades were as low as $54.49.
MT4 GRAPH: Oil
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