With January and the Chinese New Year festivities all over, metal markets are now able to get some firm price indicators, however markets report that many traders are sitting back to wait and see where pricing levels out. It seems many prefer not to be the first to jump in at the highs that we saw toward the end of last week, and as a result in the first day of trade on the LME we have seen prices drop as the high prices have reduced demand in the physical market.
**** Copper’s Gap Down Creates ‘Island Reversal’ **** By Tomi Kilgore @ dowjones.com
1:32 (Dow Jones) So much for copper’s breakout. Continuous copper futures have gapped back below the 200-day moving average after gapping above that line Thursday for the first time since early August. The two chart gaps, which sandwich a 2-session period above the 200-day MA, creates an “island reversal” pattern, suggesting those who bought on the initial breakout are trapped and will be looking to dump positions. Given its ties to economic demand, a decline in copper prices bodes badly for stocks.
**** LME Metals Lower As China Returns From Holiday **** By Francesca Freeman @ dowjones.com
1000 GMT [Dow Jones] Base metals are lower on the London Metal Exchange, extending losses from Asian trading hours. “China seems to have started the Lunar New Year on a negative footing and that has been reflected in the metals and equities this morning,” says William Adams of FastMarkets.com. “Over the next few days we should get a better feel for the mood in China and whether they start to restock or remain operating on a hand to mouth basis,” he adds. A stronger greenback is also exerting downward pressure on the dollar-denominated metals.
**** LME Metals Fall In Asia; Copper Drops 1.7% **** By Clementine Wallop Of DOW JONES NEWSWIRES
SINGAPORE (Dow Jones)–Base metal prices fell in Asian trading on the London Metal Exchange Monday, as investors locked in profits from last week’s gains and remained cautious ahead of a European Union summit starting later in the day. Monday’s selling indicated profit-taking by Chinese investors on their return to the market after the week-long Lunar New Year holiday, a supplier in Kuala Lumpur said. He attributed last week’s rally to speculative fund buying and movements in the currency markets rather than any improvement in copper demand. “These prices are puzzling to me–it’s all because of the weakness in the dollar last week and not because of fundamentals,” he said. The metals look technically overbought and the complex is overdue for a correction, he said.