Copper falls to two-week lows due to weakness in the yuan.
Meanwhile, April gold futures were trading at $2,194.25 per troy ounce
Basic metal prices fell on Tuesday, with copper on the London Metal Exchange (LME) hitting a nearly two-week low due to weakness in the Chinese yuan and concerns about demand.
Three-month copper on the LME was down 0.3% at $8,846.50 per metric ton at 1500 GMT, after falling to its lowest level since March 13, at $8,810.
“Copper took a hard hit last week, and the question is whether it can consolidate above the key support of $8,770,” said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.
Copper on the London Metal Exchange (LME) has fallen sharply, after reaching an 11-month high of $9,164.50 on March 18 following an unusual agreement by China’s copper smelters to reduce production.
The copper contract for delivery in May on the Shanghai Futures Exchange (SHFE) closed down 0.6% at 72,000 yuan ($9,973.40) per ton. It had earlier fallen to 71,720 yuan, its lowest level since March 15.
The yuan weakened against the dollar due to expectations that national monetary policy easing and strengthening of the greenback would translate into further weakness in the Chinese currency.
China is the world’s largest consumer and importer of metals, and yuan weakness erodes the purchasing power of commodities priced in the greenback.
Copper was also pressured by rising inventories in LME-authorized warehouses, which stood at 117,900 tons, the highest level since February 29.
The discount of LME cash copper to the three-month contract widened on Monday to $115.37 per ton, the highest since at least 1982, according to LSEG data, indicating ample short-term supply.
At the Comex division of the New York Mercantile Exchange, April gold futures were trading at $2,194.25 per troy ounce. As of the writing of this report, they had increased by 0.82%.
It reached an early session high of $2,200.50 per troy ounce. Gold is likely to find support at $2,152.30 and resistance at $2,225.30.
Among other base metals, aluminum on the LME fell 1% to $2,302.50 per ton, nickel dropped 1.6% to $16,670, zinc lost 2% to $2,445, tin declined 0.6% to $27,405, while lead fell 0.8% to $2,019.
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