US copper futures closed 4 percent lower in volatile trading on Wednesday amid fears of a recession and uncertainties over the red metal's near-term direction. Benchmark copper for March delivery on the New York Mercantile Exchange's COMEX division ended 12.45 cents lower at $3.0720 a lb in open outcry dealing.
"Once again, we had a day of indecision and volatility in the marketplace," said Ralph Preston, senior market analyst at Heritage West Financial in San Diego, California.
"We're actually just in a broad trading range between $3.30 and $2.85 on the March contract for the past three months now, and the market continues to be indecisive on the recession story." March copper traded in a band of 13.5 cents on Wednesday, moving between a session high of $3.20 and low of $3.0650.
It hit a one-month low of $3.0120 on Tuesday as global equity and commodity markets came under heavy selling pressure on fears that the US economy will post negative growth this year and dampen global growth along with it. A surprise interest rate cut by the US Federal Reserve on Tuesday, however, gave commodity markets a reprieve before they closed as the rate cut took the dollar down, boosting export prospects for commodities.
The Fed made its sharpest cut in more than 20 years to bring short-term interest rates to 3.5 percent from 4.25 percent. Speculation was rife that the central bank would again trim rates next week to 4 percent. Traders said a weaker dollar against the yen helped COMEX copper to recover during Wednesday's session. But the market fell by the close as recession worries outweighed other factors.