Investing.com - Copper futures came under heavy selling pressure during European morning trade on Wednesday, trading at the lowest level since January as appetite for riskier assets weakened amid concerns over a potential Greek exit from the euro zone.
On the Comex division of the New York Mercantile Exchange, copper futures for July delivery traded at USD3.465 a pound during European morning trade, tumbling 1.5%.
It earlier fell by as much as 1.95% to trade at USD3.450 a pound, the lowest since January 10.
Copper futures have been on a rapid decline since the outcome of the May 6 elections in Greece threw the future of the country’s international bailout deal into doubt and fuelled fears over a possible Greek exit from the euro zone.
The June copper contract has lost nearly 8% over the past seven trading sessions.
Speculation over the possibility of a Greek exit from the euro zone intensified on Tuesday, as talks aimed at forming a coalition government failed.
A caretaker government will be appointed later Wednesday, with new elections likely in early June, fuelling fears over a potential Greek default and eventual exit from the euro zone.
Reports that Greeks have withdrawn as much as EUR700 million from the nation’s banks since the outcome of the elections further added to the gloomy environment.
Further weighing on sentiment, Spanish 10-year yields traded at 6.48%, the highest since late-November and fast approaching the unsustainable 7%-level. Similar-maturity Italian yields increased to 5.95%, after touching 6% for the first time since January.
Europe as a region is second in global demand for the industrial metal. Prices have tracked investor sentiment toward the euro zone’s debt crisis in recent months.
The heightened sense of risk aversion prompted investors to shun riskier assets, such as stocks and industrial commodities, and flock to the relative safety of the U.S. dollar.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.1% to trade at 81.50, the highest since January 16.
Copper’s losses were deeper during the Asian trading session after a mainland Chinese newspaper reported flat loan growth for the first two weeks of May by the country's "Big Four" state-owned banks, further adding to concerns over a slowdown in the world’s second largest economy.
China is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.
A deeper slowdown in China, the world’s second biggest economy, would impair a global expansion that is already faltering because of the implementation of harsh austerity measures in Europe.
Copper is sensitive to the global growth outlook because of its widespread uses across industries. The industrial metal is regarded as a leading indicator of the global economy.
Elsewhere on the Comex, gold for June delivery dropped 1.3% to trade at USD1,536.55 a troy ounce, while silver for July delivery sank 2.4% to trade at USD27.40 a troy ounce.
On the Comex division of the New York Mercantile Exchange, copper futures for July delivery traded at USD3.465 a pound during European morning trade, tumbling 1.5%.
It earlier fell by as much as 1.95% to trade at USD3.450 a pound, the lowest since January 10.
Copper futures have been on a rapid decline since the outcome of the May 6 elections in Greece threw the future of the country’s international bailout deal into doubt and fuelled fears over a possible Greek exit from the euro zone.
The June copper contract has lost nearly 8% over the past seven trading sessions.
Speculation over the possibility of a Greek exit from the euro zone intensified on Tuesday, as talks aimed at forming a coalition government failed.
A caretaker government will be appointed later Wednesday, with new elections likely in early June, fuelling fears over a potential Greek default and eventual exit from the euro zone.
Reports that Greeks have withdrawn as much as EUR700 million from the nation’s banks since the outcome of the elections further added to the gloomy environment.
Further weighing on sentiment, Spanish 10-year yields traded at 6.48%, the highest since late-November and fast approaching the unsustainable 7%-level. Similar-maturity Italian yields increased to 5.95%, after touching 6% for the first time since January.
Europe as a region is second in global demand for the industrial metal. Prices have tracked investor sentiment toward the euro zone’s debt crisis in recent months.
The heightened sense of risk aversion prompted investors to shun riskier assets, such as stocks and industrial commodities, and flock to the relative safety of the U.S. dollar.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.1% to trade at 81.50, the highest since January 16.
Copper’s losses were deeper during the Asian trading session after a mainland Chinese newspaper reported flat loan growth for the first two weeks of May by the country's "Big Four" state-owned banks, further adding to concerns over a slowdown in the world’s second largest economy.
China is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.
A deeper slowdown in China, the world’s second biggest economy, would impair a global expansion that is already faltering because of the implementation of harsh austerity measures in Europe.
Copper is sensitive to the global growth outlook because of its widespread uses across industries. The industrial metal is regarded as a leading indicator of the global economy.
Elsewhere on the Comex, gold for June delivery dropped 1.3% to trade at USD1,536.55 a troy ounce, while silver for July delivery sank 2.4% to trade at USD27.40 a troy ounce.