Copper Prices Ease Ahead of Federal Reserve Decision

Strategic Insights -

The copper futures market was cautious on Wednesday as investors awaited the Federal Reserve's decision on monetary easing, with the most actively traded contract for December delivery easing 2.7 cents, or 0.7%, to $3.8120 per pound on the Comex division of the New York Mercantile Exchange. Traders were positioning themselves ahead of the announcement, with some expecting a smaller injection into the money supply that could crimp investment demand in copper. Meanwhile, inventories of copper stored in London Metal Exchange warehouses fell 875 metric tons, leaving them at 366,075.

Key Takeaways:

  • Copper futures eased 2.7 cents, or 0.7%, to $3.8120 per pound on Comex.
  • Traders were positioning themselves ahead of the Federal Reserve's announcement on monetary easing.
  • Increasing expectations of a new round of monetary stimulus had boosted copper prices to 27-month highs last month.
  • Stronger economic data has caused some to lower their expectations for more-aggressive stimulus efforts.
  • MF Global analyst Edward Meir predicted little price change until the Fed decision is announced in the afternoon.
  • Inventories of copper stored in London Metal Exchange warehouses fell 875 metric tons.

Statistics:

  • Copper futures fell 2.7 cents, or 0.7%, to $3.8120 per pound.
  • Inventories of copper stored in London Metal Exchange warehouses fell by 875 metric tons.
  • The most recent Comex inventory data showed a decrease of 87 short tons to 75,013 short tons.
  • Copper prices reached 27-month highs last month due to increased expectations of monetary stimulus.

Sources:

  • Dow Jones Commodities News via Comtex
  • Ira Epstein, director of the Ira Epstein division of the Linn Group in Chicago
  • Edward Meir, MF Global analyst.
  • Matt Whittaker, Dow Jones Newswires
  • The Federal Reserve's Federal Open Market Committee meeting minutes.