SG:LME copper edges off 2 week top on China property warning
Reuters reported that London copper prices edged down weighed down by China's warning against relaxing curbs on the property sector, a move many investors favor as a quick way to boost domestic consumption.
Recent weak US data that underscores a fragile US economic recovery also dampened sentiment amid investor worries about a global economic slowdown.
Mr Zhou Jie analyst of CIFO Futures said that "The government's latest comments on property purchase curbs dashed the hopes of those who were looking for a reversal on current restrictions which will likely boost metals demand from construction and household appliances."
Beijing issued a firm reminder to local governments to keep clamping down on property speculation, underlining official concerns about renewed inflationary pressures even as the broader economy slows.
Three month copper on the London Metal Exchange fell 0.1% to USD 7,719.75 per tonne after touching 2 week high of USD 7,813 on Thursday its highest since July 3rd 2012. It is on track to post a weekly rise of 0.2% in its second such increase in a row.
Mr Zhou said that from a technicals perspective, after London copper failed to guard its position above the USD 7,800 resistance level it fell back to its previous range of USD 7,600 to USD 7,800. Today's movements reflect this.
Mr Wang Tao Reuter’s technical analyst expects LME copper to retrace to USD 7,697 per tonne due to a resistance zone of USD 7,823 to USD 7,839. The most active November copper contract on the Shanghai Futures Exchange fell 0.6% to CNY 55,910 per tonne pushed down by Shanghai equities amid thin trading volumes. SSEC Shanghai copper is up 0.8% on the week.
Traders said that contracts' real trading volumes were low as Chinese speculators were still focused on agricultural futures. Taken at face value, Shanghai copper trading volumes of over 300,000 lots were already relatively small. And this number includes open positions being moved to November.
Worries over a slowdown in the US economy rose after data showed factory activity in the Mid Atlantic region contracted in July for a third straight month and that new claims for jobless aid surged last week. This offset a spot of good news from the euro zone, where German Chancellor Angela Merkel easily won a parliamentary vote on a euro zone rescue package for Spanish banks on Thursday and from Japan where a poll showed big manufacturers' outlook improving slightly in July.
