Investing.com - Copper prices declined on Wednesday, remaining near six-year lows hit earlier in the week, as investors continued to monitor movements on China's volatile stock market.
Copper for September delivery on the Comex division of the New York Mercantile Exchange shed 1.4 cents, or 0.61%, to trade at $2.348 a pound during European morning hours.
A day earlier, copper inched up 1.6 cents, or 0.68%, to end at $2.362. Copper tumbled to $2.321 on Monday, a level not seen since June 2009.
The Shanghai Composite took investors on a roller coaster ride on Wednesday, dropping more than 1% after the open, only to rebound into positive territory ahead of the midday break, and then drop again in afternoon trade to end down 1.7%.
The index lost almost 15% in July despite the introduction of government-measures aimed at supporting the market.
Data released earlier showing that activity in China's services sector grew at its fastest pace in 11 months in July failed to ease concerns over the health of the nation's economy.
The Caixin/Markit services purchasing managers' index rose to 53.8 last month from June's reading of 51.8, hitting the highest level since August 2014.
Copper prices sank 25.1 cents, or 9.6%, in July, as steep declines on China's stock market rattled investors' confidence.
Market players are concerned that the plunge in the stock market could spread to other parts of the Chinese economy, triggering fears that the Asian nation's demand for the industrial metal will decline.
China is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.
Elsewhere, gold futures for December delivery declined $5.30, or 0.49%, to trade at $1,085.40 a troy ounce, while silver futures for September delivery shed 6.2 cents, or 0.43% to trade at $14.49 an ounce.
Investors looked ahead to the release of key data later in the session for further indications over the timing of a U.S. rate increase and the strength of the economy.
Later in the day, the U.S. was to release the ADP jobs report for July, while the ISM was to report on service sector activity. Market players were also waiting for Friday's U.S. nonfarm payrolls report.
The consensus forecast is that the report will show jobs growth of 223,000 last month. Monthly jobs gains above 200,000 are seen by economists as consistent with strong employment growth.
Gold has been under heavy selling pressure in recent months amid speculation the Federal Reserve will raise interest rates for the first time in nine years as soon as September.
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.
Atlanta Federal Reserve Bank President Dennis Lockhart, in an interview with the Wall Street Journal, said the Fed was "close" to being ready to raise short-term rates. Lockhart added that it would take "significant deterioration" in the U.S. economy for him to not support a rate hike in September.
Lockhart, a voter this year, is deemed somewhat as a moderate, analysts said, which made his remarks more meaningful.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was at 98.20 early on Wednesday, the highest level since April 23.
A stronger U.S. dollar usually weighs on gold, as it dampens the metal's appeal as an alternative asset and makes dollar-priced commodities more expensive for holders of other currencies.
The greenback has been boosted recently by expectations that the improving U.S. economy will prompt the Federal Reserve to raise short term interest rates as early as September.