Copper hits seven-week lows after Trump tests positive for coronavirus
LONDON: Copper prices hit seven-week lows on Friday as demand and economic growth concerns were reinforced by news that US President Donald Trump had tested positive for the coronavirus, as well as a firmer dollar and higher inventories.
Benchmark Copper on the London Metal Exchange (LME) was down 0.9pc at $6,330 a tonne at 1000 GMT.
The metal used widely in power and constructions earlier touched $6,269, its lowest since Aug. 14.
“The news about Trump is bearish for industrial metals because he is seen as wanting to support growth and markets,” one metals trader said.
“Copper stocks are up and the dollar is firm.”
US PRESIDENT: Trump said he and his wife, Melania, have tested positive for the coronavirus and will go into quarantine, only a month away from November’s presidential election.
DOLLAR: The Trump news triggered purchases of the US currency, a strengthening of which makes dollar-priced commodities more expensive for holders of other currencies and can weigh on demand.
Funds use this relationship to generate buy and sell signals using numerical models.
TECHNICALS: Support for copper prices comes at $6,250, an area of congestion from the middle of August.
A break below that could prompt an accelerated move towards the 100-day moving average of $6,220.
STIMULUS: Also weighing on markets were signs that the United States might fail to agree a bipartisan deal on a proposed $2.2 trillion stimulus package.
“We had our doubts that agreement would be reached prior to the election, but now have changed our minds,” said ED&F Man Capital Markets analyst Edward Meir, citing rising layoffs.
“We suspect the pressure to reach a deal, particularly on the Senate Republicans and the White House, will continue to mount as the layoffs – both real and threatened – start to materialise at a faster clip.”
INVENTORIES: Stocks of copper in LME-registered warehouses have more than doubled to 161,975 tonnes since last week, easing worries about supplies on the LME market.
OTHER METALS: Aluminium was down 0.4pc at $1,732, zinc fell 1.4pc to $2,294, lead lost 1.9pc to $1,773, tin gained 0.6pc to $17,415 and nickel was down 1.3pc at $14,160.