IV:Copper futures lower as traders react to global manufacturing data
Investing.com - Copper futures were lower on Monday, as traders digested a series of manufacturing reports out of China and the euro zone in an attempt to gauge the strength of the global economy.
Manufacturing numbers are used as indicators for demand growth because of its widespread uses across industries.
On the Comex division of the New York Mercantile Exchange, copper futures for December delivery traded at USD3.291 a pound during European morning trade, down 0.9%.
Copper prices fell by as much as 1.65% earlier in the day to hit a session low of USD3.265 a pound, the weakest level since September 18. The December contract settled 0.8% lower at USD3.320 a pound on Friday.
Copper prices were likely to find support at USD3.206 a pound, the low from September 18 and resistance at USD3.359 a pound, the high from September 20.
Data released earlier in the day showed that manufacturing output in the euro zone was weaker than expected this month.
The preliminary reading of the euro zone manufacturing purchasing managers’ index fell to 51.1 in September from a final reading of 51.4 in August. Analysts had expected the index to inch up to 51.8.
Germany’s manufacturing PMI fell to 51.3 in September from a final reading of 51.8 in August, compared to expectations for an improvement to 52.2.
A separate report showed that manufacturing activity in France contracted at the fastest pace in three months in September.
Europe as a region is third in global demand for the industrial metal.
Prices remained supported after data showed that China’s HSBC Flash Purchasing Managers Index rose to a six-month high of 51.2 in September from a final reading of 50.1 in August.
The measure remained above the 50.0-mark for the second consecutive month, indicating expansion in manufacturing activity.
Copper traders consider shifts in the HSBC PMI an indicator of China's copper demand, as the industrial metal is widely used by the sector.
The Asian nation is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.
Meanwhile, uncertainty over the direction of Federal Reserve policy weighed, following last week’s surprise decision to announce no reduction to its USD85 billion-a-month stimulus program.
St. Louis Fed President James Bullard said Friday that a small tapering of bond purchases is “possible” at the central bank’s October meeting.
The Fed decided to leave its USD85 billion-a-month stimulus program unchanged. The decision surprised markets, which had been expecting the central bank to taper its monthly stimulus program by USD10 billion to USD15 billion.
The central bank’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 fell 0.8% to trade at USD1,321.60 a troy ounce, while silver for December delivery dropped 1% to trade at USD21.70 a troy ounce.
Moves in the gold and silver price this year have largely tracked shifting expectations as to whether the U.S. central bank would end its quantitative easing program sooner-than-expected.
