Copper took a pause on Wednesday, a day after it made an unprecedented one-day rally and led a broad-based rebound in industrial metals, as well as gold, oil and mining shares.
London Metal Exchange copper for delivery in three months was at $8,365/$8,425 a tonne, down $95 or 1.1 percent from Tuesday's London kerb close. "Although trading volume was relatively low, interest in the sector was clearly reinvigorated as many market participants recognised a buying opportunity," Peter Richardson, chief metals economist at Deutsche Bank, said in a daily note.
"The ability of LME metals to hold on to theses gains during the next few trading days will be an important test of the sustainability of an apparent post-correction consolidation phase."
After last week's sell-off, volatile copper surged $870 or 11.4 percent, its biggest ever daily gain, to end at $8,460 on Tuesday and pushed other metals up, with nickel hitting a record high, zinc gaining 6 percent and aluminium up 4 percent.
Copper rose as much as $8,525 on Tuesday's Select trading, up $1,120 or 15 percent from its low of $7,405. On Friday, it fell 6.7 percent, the biggest percentage drop since January 4, 2005. "On the surface this looks very bullish, but the increased volatility is a dangerous development that spells trouble ahead," analyst William Adams of BaseMetals.com, said in a daily note. "Despite the excellent show of strength on Tuesday, we advise caution as there seems a growing wish to reduce risk, and if any asset class is at high risk, it must surely be the base metals."
Prices for copper, used in construction and electronics, reached an all-time high of $8,800 on May 11, having jumped more than six-fold since late 2001 on strong demand in China and India, supply disruptions and relentless fund buying. Since then copper prices fell 17 percent by this week, but on Tuesday's rally returned them to gains of 90 percent since the end of last year.
In electronic trade, copper for July delivery fell 7.55 cents to $3.8100 a lb on Wednesday after trading between $3.7600 and $3.8750 on the New York Mercantile Exchange's Comex division.
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