Copper futures trade near lowest since October 2009

Investing.com - Copper prices traded near the lowest level in more than five years on Monday, as ongoing concerns over a slowdown in global demand weighed on the red metal.

On the Comex division of the New York Mercantile Exchange, copper for March delivery shed 0.4 cents, or 0.13%, to trade at $2.751 a pound during European morning hours, after hitting a session low of $2.741.

On Friday, copper hit $2.738 a pound, a level not seen since October 2009, before ending at $2.754, down 1.5 cents, or 0.54%, after data showed that Chinese producer price inflation dropped the most in two years in December, underling concerns over a slowdown in demand.

The Asian nation is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.

Futures were likely to find support at $2.738 a pound, the low from January 9, and resistance at $2.794, the high from January 8.

The US dollar index, which measures the greenback against a basket of six major currencies, hovered near a 12-year peak, boosted by the diverging policy outlook between the Fed and central banks in Europe and Japan.

The euro remained under pressure amid speculation that the European Central Bank will embark on full blown quantitative easing as soon as its next meeting on January 22.

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

Elsewhere on the Comex, gold futures for February delivery tacked on $5.90, or 0.49%, to trade at $1,222.00 a troy ounce, while silver futures for March delivery climbed 11.9 cents, or 0.72% to trade at $16.53 an ounce.

The Labor Department reported Friday that the economy added 252,000 jobs in December, more than the 240,000 forecast by economists. The unemployment rate ticked down to a six-and-a-half year low 5.6%.

But average earnings fell by 0.2% last month and were up by only 1.7% from a year earlier.

Weakness in earnings prompted investors to take profits in the dollar, as markets pushed back expectations for the first hike in U.S. interest rates to late-2015.

Meanwhile, oil prices continued to tumble on Monday to trade near the lowest level since spring 2009 after Goldman Sachs slashed its 2015 price forecast, citing rising global supplies.

London-traded Brent prices declined $1.21, or 2.36%, to $50.09 a barrel, while Nymex oil dropped $1.01, or 2.09%, to end at $47.35.