Copper fell on Friday, putting the brakes on a two-week rally as a dismal set of US employment data scaled back some recovery optimism. Even after Friday's near 1 percent fall, copper posted a second straight week of gains, rising 2.4 percent to extend its longest rally this year as prices bounce back from below $9,000 per tonne in June to hit their highest in three months.
Copper fell alongside oil and US stocks after data showed US employers hired a mere 18,000 workers in June, the weakest number since September, while the unemployment rate rose to 9.2 percent, its highest this year. "Copper was due for a correction and certainly the (jobs) number is a good reason for a consolidation," said Bill O'Neill, partner of LOGIC Advisors in Upper Saddle River, New Jersey.
London Metal Exchange (LME) benchmark copper peaked at $9,789.75 a tonne, the highest since April 12, before ending the day at $9,661, down $79 from Thursday's close In New York, the key September COMEX contract fell 3.00 cents to settle at $4.4120 per lb, after hitting its own 3-month top at $4.4565. In after-hours trade, it held near the $4.40 level.
Money managers in COMEX copper added 13,008 lots in the week ended July 5, boosting their net long position to 21,901 lots. This marked the largest holding for the key speculator group since the week of April 17, when they held 28,030 lots. Copper's inability to maintain gains after posting a new multi-month high could lead to further losses in the week ahead, traders warned.
"We made a higher high for this move, and its down on the day, so you have a potential reversal pattern setting up," said Scott Meyers, senior trading analyst with Pioneer Futures in New York. "We're in a wait-and-see mode. Being that it is an industrial metal, and being that we are in lock-step with the Dow, it's definitely saying that we have a reason to be cautious right now ... we could be turning the corner and heading back into a downward phase," he said. Copper has taken some comfort this week from the perception that China's third rate hike this year would probably be the last in a series aimed at reining in inflationary pressures.
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