Investing.com - Copper futures were lower on Thursday, after the Federal Reserve fueled bets it may start paring stimulus sooner than previously expected.
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.
On the Comex division of the New York Mercantile Exchange, copper futures for December delivery traded at USD3.307 a pound during European morning trade, down 0.55%.
Copper prices traded in a range between USD3.292 a pound, the daily low and a session high of USD3.320 a pound. The December contract ended 1.45% higher on Wednesday to settle at USD3.325 a pound.
Copper prices were likely to find support at USD3.246 a pound, the low from October 29 and resistance at USD3.334 a pound, the high from October 23.
The Fed said on Wednesday that it would keep buying USD85 billion a month in mortgage and Treasury securities, as widely expected.
Fed officials stuck to the view that the economy is expanding "at a moderate pace" and said downside risks were diminishing, sparking speculation the central bank could start tapering stimulus at its December meeting.
The U.S. dollar strengthened as traders reassessed their expectations regarding the duration of the Federal Reserve’s bond-buying program.
The dollar index, which tracks the performance of the greenback against a basket of six other major currencies, was up 0.3% to trade at 80.02, the strongest level since October 17.
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, copper traders looked ahead to key manufacturing data out of China later in the week to gauge the economic strength of the world’s largest copper consumer.
The government will release the official manufacturing purchasing managers' index for October on Friday, while HSBC will also produce final data on its purchasing managers' index for October on Friday.
Copper traders consider shifts in the country’s PMI as an indicator of China's copper demand, as the industrial metal is widely used by the sector.
Elsewhere on the Comex, gold for December delivery dropped 1.1% to trade at USD1,334.50 a troy ounce, while silver for December delivery plunged 2.75% to trade at USD22.35 a troy ounce.
Later in the day, the U.S. was to release data on initial jobless claims and a report on manufacturing activity in the Chicago region.
Market players 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.
