NEW YORK—Copper futures fell to a six-week low after U.S. housing-starts data missed forecasts and as investors braced for the outcome of the Federal Reserve’s monetary policy setting meeting on Wednesday.
The most actively traded contract, for July delivery, was recently down 4.40 cents, or 1.4%, at $3.1535 a pound on the Comex division of the New York Mercantile Exchange.
The contract touched an intraday low of $3.1510 a pound, the lowest traded price since May 3.
U.s. construction of new homes rose less than expected in May, sending copper prices lower. Housing starts increased 6.8% from April to a seasonally adjusted annual rate of 914,000, the Commerce Department said Tuesday. Economists had forecast an 11.4% increase to a rate of 950,000.
“We were below expectations on the starts, and that really doesn’t help because copper is a big focus when it comes to housing,” said Bill Baruch, senior market strategist with ii Trader.
Copper electrical wires and plumbing are both widely used in residential construction, and the sector’s recovery had, until recently, been a bright spot for copper demand.
Copper traders are also growing anxious as the Federal Open Market Committee arm kicks off its two-day meeting. Investors hope the Fed will shed more light on the timing and pace of its exit from its bond-purchasing efforts.
“It not only has to calibrate its exit from the bond markets, but has to do so without unsettling the fragile recovery that is in place,” said Edward Meir, a senior commodities analyst with INTL FCStone.
For copper traders, the concern is that a mistimed or overly fast removal of supportive measures will undercut U.S. economic growth and reduce demand for the industrial metal.
“There’s a lot of fear that if the Fed does taper, globally demand is going to go down,” Mr. Baruch said.
