Copper futures trade near 4-1/2 year low as stronger dollar weighs

Investing.com - Copper prices held near the lowest level in more than four years on Wednesday, as a broadly stronger U.S. dollar and concerns that Greece might exit the euro zone hit sentiment.

On the Comex division of the New York Mercantile Exchange, copper for March delivery shed 0.8 cents, or 0.28%, to trade at $2.759 a pound during European morning hours, after hitting a session low of $2.749.

A day earlier, copper picked up 0.1 cents, or 0.04%, to settle at $2.767 a pound. The red metal hit $2.744 on Monday, a level not seen since June 2010.

Futures were likely to find support at $2.744 a pound, the low from January 5, and resistance at $2.827, the high from January 5.

The US dollar index, which measures the greenback against a basket of six major currencies, traded at a nine-year high, boosted by the diverging policy outlook between the Federal Reserve and central banks in Europe and Japan.

A stronger dollar reduces demand for raw materials as an alternative investment and makes dollar-priced commodities more expensive for holders of other currencies.

Appetite for riskier assets remained weak amid uncertainty over Greece’s future in the euro zone if left-wing anti-austerity party Syriza win elections due to be held later this month.

Elsewhere on the Comex, gold futures for February delivery dipped $4.20, or 0.34%, to trade at $1,215.20 a troy ounce, while silver futures for March delivery lost 17.7 cents, or 1.06% to trade at $16.46 an ounce.

The Federal Reserve was to publish the minutes of its December policy meeting later Wednesday, which were expected to provide further indications on the future direction of monetary policy.

The U.S. was also to release the ADP report on private sector job creation later in the day, for further indications on the strength of the recovery in the labor market.

Gold lost nearly 2% in 2014 amid indications a strengthening U.S. economic recovery will force the Fed to start raising interest rates sooner and faster than previously thought.

Expectations of higher borrowing rates going forward is considered bearish for gold, as the precious metal struggles to compete with yield-bearing assets when rates are on the rise.

Meanwhile, oil prices continued to tumble on Tuesday to hit the lowest level since spring 2009, as investors piled on to their short positions in anticipation of lower prices amid lingering concerns over a growing supply glut.

London-traded Brent prices declined $1.08, or 2.11%, to $50.02 a barrel, while Nymex oil futures dropped 83 cents, or 1.74%, to $47.10.