Metals: Copper Prices Fall on Weak Chinese Data

Copper prices edged down on Tuesday after weaker-than-expected economic data from China raised concerns over demand.

The base metal fell 0.51% to $6,863 in early afternoon trade, reversing a gentle rally Monday, driven by a combination of lower prices and supply disruptions.

Gold prices also moved lower, by 0.34% to $1,273.96 a troy ounce.

Chinese data released Tuesday showed industrial production and fixed-asset investment growth slowed in October. According the National Bureau of Statistics, industrial output in China, the biggest consumer of base metals, grew by 6.2%, a tenth of a percentage point less than expected by the market.

"Copper is drifting lower on the back of Chinese output and consumption numbers," said Ole Hansen, commodity strategist at Saxo Bank, noting that both indicators softened in October, adding to the bearish sentiment.

With winter approaching, a traditionally weak season for Chinese demand, investors worried copper's rally this year may not continue. Tighter credit conditions and a slowdown in the property market also pointed to cooling economic growth in China, Mr. Hansen said.

"The market will eagerly be awaiting the November production numbers, given that this should partly reflect the impact of the winter capacity cuts," said ING in a note.

Meanwhile, traders were keeping a close eye on the U.S. consumer-price index for October, due Wednesday, as a proxy for inflation and a potential driver of dollar moves that could have an impact on the metals.

The WSJ Dollar Index, which measures the greenback against a basket of other currencies, was down 0.22% at 87.53 Tuesday.

Among precious metals, silver was down 0.59% at $16.95 a troy ounce, palladium fell 0.33% to $989.75 a troy ounce and platinum gained 0.05% to $933.45 a troy ounce.

Among base metals, zinc fell 1.13% to $3,183.50 a metric ton, aluminum fell 0.19% to $2,106.50 a metric ton, tin rose 0.41% to $19,475 a metric ton, nickel fell 1.72% to $12,290 a metric ton and lead fell 1.37% to $2,488.50 a metric ton.

Write to Marina Force at marina.force@dowjones.com

Copper prices fell Tuesday after w eaker-than-expected economic data from China raised concerns over demand.

Copper for December delivery fell 1.9% to $3.0580 a pound on the Comex division of the New York Mercantile Exchange. The industrial metal has risen roughly 25% this year to nearly three-year highs, supported by strong demand from China, the world's largest industrial metals consumer.

However, analysts have cautioned that an economic slowdown in China, which accounts for nearly half the world's copper consumption, could drag down prices.

Data Tuesday showed industrial output and fixed-asset investment growth slowed in October. The industrial output reading was the second-slowest of the year.

"Copper is drifting lower on the back of Chinese output and consumption numbers," said Ole Hansen, commodity strategist at Saxo Bank, noting that both indicators softened in October, adding to the bearish sentiment.

With winter approaching, a traditionally weak season for Chinese demand, some investors are worried copper's rally this year may not continue. Tighter credit conditions and a slowdown in the property market also pointed to cooling economic growth in China, Mr. Hansen said.

Investors will continue monitoring Chinese economic data moving forward, as robust demand and anticipated supply deficits have buoyed industrial metals prices throughout the year.

Among precious metals, gold for December delivery was down less than 0.1% at $1,278.70 a troy ounce after data showed a gauge of U.S. business prices rose at a steady pace in October, a sign that inflation pressures are building, which could affect interest-rate expectations.

The precious metal has traded roughly flat so far in November and sits about 5.5% off its year-to-date high from early September, weighed down by a stronger dollar and concerns about rising interest rates. Gold struggles to compete with yield-bearing assets like Treasurys when borrowing costs rise, so strong readings on the U.S. economy that some analysts think could justify higher rates have weighed on the precious metal.

Many investors and analysts are waiting to see if the Federal Reserve sticks with its plans for gradual rate increases heading into 2018. Although a rate increase in December is widely expected, bets on a more dovish Fed moving forward could support gold prices, said Maxwell Gold, director of investment strategy at ETF Securities.

The latest consumer-price data for October is expected Wednesday.

Traders were tracking the dollar's reaction to this week's economic data, as gold and other dollar-denominated commodities become cheaper for foreign buyers when the U.S. currency falls. The WSJ Dollar Index, which tracks the dollar against a basket of 16 other currencies, was down 0.3% Tuesday.

Write to Amrith Ramkumar at amrith.ramkumar@wsj.com

(END) Dow Jones Newswires

November 14, 2017 11:31 ET (16:31 GMT)