Copper futures ended with losses on Tuesday on fears of slowing demand from China and gains in the dollar after comments by Federal Reserve chief Ben Bernanke.
China's manufacturing growth fell in May, the CLSA China Purchasing Managers' Index showed yesterday. The index slipped to 54.7 from 55.4 in April, suggesting demand may wane. Adding concerns that demand is decreasing, inventories of copper on the Shanghai Futures Exchange have increased 85 percent this year.
Copper futures for delivery in July dropped 1.85 cents or 0.51 percent to $3.5780 a pound on the Comex division of the New York Mercantile Exchange.. The metal had declined to $3.545 a pound yesterday, its lowest price since March 24.
Today, Bernanke said that the slide in the U.S. currency has contributed to a rise in inflation.
For many, Bernanke's comment signaled the Fed is likely to keep interest rates steady, boosting the value of the dollar and helping to send commodities prices lower. Previously, a falling dollar prompted investors to buy commodities as a hedge against inflation.
The dollar climbed 0.52 percent on Tuesday to $1.5456 per euro at 4:22 p.m. in New York. It traded at $1.5411 per euro earlier, its strongest since May 14.The dollar index, which tracks the development of the U.S. dollar against six major currencies including the euro and the yen, rose as much as 0.8 percent today.
In a speech delivered via satellite to an international monetary conference in Spain, Bernanke commented that a weak global economy will hurt the price of all commodities.
Inflation has remained high, largely reflecting continued sharp increases in the prices of globally traded commodities, Bernanke said.
He added that futures markets continue to predict—albeit with a great range of uncertainty—that commodity prices will level out, a forecast consistent with our expectation of some overall slowing in the global economy and thus in the demand for raw materials.
Copper futures for three months delivery on the London metal Exchange rose $1 or 0.01 percent to $8,018 a metric ton on Tuesday.