IV:Copper futures decline as stronger dollar weighs
Investing.com - Copper futures edged lower on Wednesday, as escalating geopolitical tensions between the U.S. and Syria continued to weigh on appetite for riskier assets.
On the Comex division of the New York Mercantile Exchange, copper futures for December delivery traded at USD3.326 a pound during European morning trade, down 0.3%. The December contract settled up 0.25% at USD3.335 a pound on Tuesday.
Nymex copper prices fell by as much as 0.75% earlier in the day to hit a session low of USD3.310 a pound.
Copper prices were likely to find support at USD3.295 a pound, the low from August 22 and resistance at USD3.394 a pound, the high from August 26.
Expectations for a military strike against Syria grew after U.S. Defense Secretary Chuck Hagel said Tuesday that U.S. forces are "ready" to launch strikes if President Barack Obama chooses to order an attack.
On Monday, U.S. Secretary of State John Kerry said there was “undeniable” proof that the Syrian government had used chemical weapons against civilians.
The geopolitical concerns prompted investors to shun riskier assets, such as stocks and commodities and move in to more traditional safe-haven assets like the U.S. dollar and the yen.
The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, was up 0.15% to trade at 81.32.
A stronger dollar reduces demand for raw materials as an alternative investment and makes dollar-priced commodities more expensive for holders of other currencies.
Meanwhile, uncertainty over the timing of a reduction in the Federal Reserve’s bond-buying program continued after data showed that U.S. consumer confidence rose more than expected in August, hitting the highest level since January 2008.
The Conference Board said Tuesday its index of consumer confidence rose to 81.5 in August from an upwardly revised 81.0 in July. Analysts had expected the index to tick down to 79.0.
The data came after a report on Monday showed that U.S. durable goods orders dropped 7.3% in July, worse than expectations for a 4% decline. It was the largest decline since August 2012.
Copper traders have closely been looking out for U.S. data reports recently to gauge if they will strengthen or weaken the case for the Fed to reduce its bond purchases.
The central bank is scheduled to meet September 17-18 to review the economy and assess policy.
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 December delivery rose 0.5% to trade at USD1,427.00 a troy ounce, while silver for December delivery added 0.6% to trade at USD24.85.
Investors often buy gold and silver as refuges against political uncertainty.
