Shanghai copper dips

Shanghai copper futures plunged by the daily 4 percent limit on Monday, tracking losses of more than 2 percent in London, as sentiment was dented by general weakness in commodities led by oil and gold.
The most actively traded November Shanghai copper futures fell as far as 71,170 yuan, down 2,970 yuan or 4 percent from Friday's settlement of 74,140 yuan a tonne, before recovering slightly to 71,300 yuan by the close.
The November contract closed at 73,770 yuan on Friday. "Selling pressure is extremely strong from China after sharp drop in London. Sentiment for copper in general is deteriorating rapidly," said a trader at a Japanese trading company.
"The mood of the market is turning bearish as funds are now very keen to liquidate positions in commodities and base metals are no exception," he said. Sentiment towards commodities, including copper, was weakened on Monday as spot gold dropped below psychologically sensitive $600 an ounce and benchmark and crude oil futures slipped below $66 a barrel.
Oil prices fell, adding to last week's slide, on an improved US supply picture and signs of easing tension over Iran's nuclear programme. Gold fell as far as $597.30 to a two-month low as bearish oil prices and the strength of the dollar induced strong sales. Benchmark three-month London Metal Exchange copper futures was trading at $7,780 a tonne on Select, down from the London kerb close of $7,815 on Friday.
Technicals for LME copper weakened, as they were unable to sustain the closely watched $8,000 mark last week. It had peaked at $8,110 on Thursday. "Copper really had no clear fundamental reasons to jump sharply last week. So now we are seeing a major reaction," the trader said. Traders are watching whether the key LME contract can sustain its 100-day moving average of around $7,550 in the near term.
They said a clear break below the level could spur strong liquidation from fund operators to pave the way for it to drop below $7,000 for the first time since late June.
"We've seen copper fall from the $8,000-level several times. It could be very dangerous for the market if investors and hedge funds really started liquidating their positions heavily," said Tetsu Emory, chief strategist at Mitsui Bussan Futures in Tokyo.
"In the near term, we have to see whether copper can sustain $7,500, but having seen gold and oil prices dip so much, it would be tough for copper to be supported," Emory said.