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Copper Futures Pull Back Amid Profit-Taking and Weakening Fundamentals

Strategic Insights

— 1 min read

Copper futures eased Tuesday despite a constructive report on pending-home sales, with most-active July copper falling 2.15 cents to settle at $2.2975 per pound on the Comex division of the New York Mercantile Exchange. The pullback occurred despite a weak dollar index and favorable housing data, which is typically supportive of copper prices due to the metal's use in construction. The National Association of Realtors reported that its index of pending sales of previously owned homes increased for the third month in a row during April, rising by 6.7% to 90.3 from 84.6 in March.

Key Takeaways:

  • Copper futures pulled back on Tuesday, with most-active July copper falling 2.15 cents to settle at $2.2975 per pound on the Comex division of the New York Mercantile Exchange.
  • The pullback occurred despite a weak dollar index, which normally helps copper prices by making the metal cheaper in other currencies.
  • Favorable housing data was released, with the National Association of Realtors reporting a 6.7% increase in its index of pending sales of previously owned homes in April.
  • A New York trader noted that the pullback was "pretty dramatic," with many participants having already bought the metal and now wanting to take profits.
  • Michael Gross, broker and futures analyst with OptionSellers.com, identified the $2.24 area as nearby support for July copper, and the $3.10 area as significant resistance.
  • Inventories of copper stored in London Metal Exchange warehouses fell 2,750 metric tons on Tuesday, to 309,225.

Statistics:

  • Most-active July copper fell 2.15 cents to settle at $2.2975 per pound on the Comex division of the New York Mercantile Exchange.
  • The dollar index was down by nearly two-thirds of a point ahead of the copper close.
  • The National Association of Realtors reported a 6.7% increase in its index of pending sales of previously owned homes in April.
  • Inventories of copper stored in London Metal Exchange warehouses fell 2,750 metric tons on Tuesday.

Sources:

  • Dow Jones Commodities News via Comtex, "Copper pulls back amid profit-taking and weakening fundamentals" (Jun 2, 2009)
  • National Association of Realtors, "Pending Home Sales Rise Again in April" (Apr 2009)
  • OptionSellers.com, "Copper Support and Resistance Levels" (Jun 2, 2009)
  • Comtex, "Copper futures eases on profit-taking" (Jun 2, 2009)

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