Copper futures faced a downward trajectory on Wednesday, September 6th, primarily driven by a strengthening US dollar, which rendered copper contracts, priced in US dollars, less appealing to investors compared to alternative investments like silver. Additionally, negative indicators from German industrial orders further contributed to the subdued copper market.
Copper contracts on the COMEX market (Commodity Exchange) for December delivery experienced a decline of 6.25 cents, marking a significant 1.62% drop, with a closing price of $3.7860 per pound.
The US dollar, as measured by the dollar index gauging its performance against six major currencies, witnessed a marginal rise of 0.05%, reaching a level of 104.8613. This modest strengthening of the dollar created headwinds for copper futures, as it made them comparatively more expensive for investors holding silver.
Adding to copper’s woes were disappointing German industrial orders data for July, signaling potential weakness in the global economy. Month-on-month, German industrial orders plummeted by a staggering 11.7% when adjusted for seasonality and the calendar year. This figure far exceeded the expectations of analysts surveyed by Reuters, who had anticipated a more modest decline of 4.0%.
The unexpected sharp drop in German industrial orders underscored concerns about the broader economic landscape, especially in the Eurozone, and had a ripple effect on copper futures. As industrial activity in Germany, a major player in the global manufacturing sector, faced challenges, it raised questions about the health of the global economy and consequently impacted copper prices.
Investors and analysts will continue to monitor developments in the copper market, keeping a close eye on factors such as currency movements and economic indicators, as they assess the prospects for this vital industrial metal.