Copper futures continue to trade around a 2-year high, with increasing demand from industrial exporters like Germany and China counterbalanced by sustained weakness in the economy as a whole. By midday, Globex Decmber copper futures had dropped 2.35 cents to 359.45 cents per pound, after earlier reaching as high as 364.4 cents per pound.
Last week, the red metal climbed steadily; on the London Metal Exchange, it came within spitting distance of the historic resistance level of $8,000 per ton. The last time it crossed that line was in April, but it quickly dropped off.
Like crude oil, copper is intrinsically linked to the ups and downs of the economy as a whole, and industrial production in particular. It also depends greatly on the fortunes of the housing market; in the U.S., a quarter of all copper consumption comes from construction activity.
"On the balance of these probabilities, then, we believe it is likely that copper will at best 'pause' for a while," Citigroup analysts said in a report covered by Bloomberg. The analysts projected that prices could fall by about a fifth before they "justifiably advance through old highs."
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