Copper struggles near 6-year low as stronger dollar weighs
Investing.com – Copper prices struggled to pull away from six-year lows hit earlier in the week on Thursday, as a broadly stronger U.S. dollar reduced demand for the red metal.
for September delivery on the Comex division of the New York Mercantile Exchange inched up 0.3 cents, or 0.14%, to trade at $2.352 a pound during European morning hours.
A day earlier, copper shed 1.3 cents, or 0.57%, to end at $2.348. Copper tumbled to a six-year low of $2.321 on August 3, following the release of disappointing Chinese manufacturing activity data.
The Asian nation is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.
The , which measures the greenback’s strength against a trade-weighted basket of six major currencies, was at 98.07 early on Thursday, trading close to the previous session’s three-month peak of 98.33.
A stronger dollar reduces demand for raw materials as an alternative investment and makes dollar-priced commodities more expensive for holders of other currencies.
The greenback has been boosted recently by expectations that the improving U.S. economy will prompt the Federal Reserve to raise short term interest rates as early as September.
Data on Wednesday showed that service sector activity in the U.S. grew at the fastest pace since August 2005 in July. The Institute of Supply Management said its rose to 60.3 last month from 56.0 in June, above forecasts for a reading of 56.2.
The data came after payroll processing firm ADP said rose 185,000 last month, below expectations for an increase of 215,000.
Market players now looked ahead to Friday’s U.S. nonfarm payrolls report. The consensus forecast is that the report will show jobs growth of 223,000 last month. Monthly jobs gains above 200,000 are seen by economists as consistent with strong employment growth.
Elsewhere, for December delivery declined $1.40, or 0.13%, to trade at $1,084.20 a troy ounce, while for September delivery shed 2.8 cents, or 0.19% to trade at $14.52 an ounce.
Gold has been under heavy selling pressure in recent months amid speculation the Federal Reserve will raise interest rates in September for the first time since 2006.
Expectations of higher borrowing rates going forward is considered bearish for gold, as the precious metal struggles to compete with yield-bearing assets when rates are on the rise.
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