Copper holds near 4-1/2 year low in risk-off trade

Investing.com - Copper prices traded near the lowest level in more than four years on Tuesday, as sentiment was hit amid growing fears that Greece might exit the euro zone.

On the Comex division of the New York Mercantile Exchange, copper for March delivery inched up 0.4 cents, or 0.14%, to trade at $2.770 a pound during European morning hours.

A day earlier, copper fell to $2.744 a pound, a level not seen since June 2010, before settling at $2.766, down 5.1 cents, or 1.83%.

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.

Appetite for riskier assets weakened 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.

The US dollar index, which measures the greenback against a basket of six major currencies, traded near 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.

The red metal slumped approximately 18% in 2014 as concerns over the global economic outlook and the impact on future copper demand prospects dampened the appeal of the commodity.

Elsewhere on the Comex, gold futures for February delivery rose $8.00, or 0.66%, to trade at $1,212.00 a troy ounce, while silver futures for March delivery jumped 10.0 cents, or 0.62% to trade at $16.31 an ounce.

In the week ahead, investors will be turning their attention to Friday’s U.S. nonfarm payrolls report for further indications on the strength of the recovery in the labor market. Wednesday’s Federal Reserve meeting minutes will be also closely watched.

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 $1.48, or 2.78%, to $51.64 a barrel, while Nymex oil futures dropped $1.27, or 2.55%, to end at $48.77.