Copper on MCX settled down -0.39% at 322.80 as concerns about persistent oversupply outweighed upbeat Chinese economic data. The metal, widely used in construction and electronics, rose more than 3 percent last week, its biggest weekly gain in two months, after Chinese economic data indicated a firmer tone to China's housing market and a revival in factory activity. China returned from several days of holiday to a spate of encouraging readings on its economy.
Business confidence among entrepreneurs has picked up for the second quarter in a row, while average new home prices in China's 70 major cities rose 9.2 percent in August. Higher property prices in China could prompt Beijing to take action to avert a bubble in the housing market, Commerzbank (DE:CBKG) analyst Eugen Weinberg said. Meanwhile the US Commodity Futures Trading Commission data showed on Friday that hedge funds and money managers reduced their net short positions in COMEX copper in the week to Sept. 13. Chile’s copper output slid 5.18% year-on-year during January-July, due mainly to lower ore grade, and this is believed to abate global oversupply.
Copper output decline in Chile, world’s largest copper producing country, prevented global copper supply from surging. A retreat in the dollar helped support some other base metals on Monday. Strength in the dollar makes assets priced in the US unit more expensive for holders of other currencies. Technically market is under long liquidation as market has witnessed drop in open interest by -3.52% to settled at 25264 while prices down -1.25 rupee, now Copper is getting support at 321.6 and below same could see a test of 320.3 level, and resistance is now likely to be seen at 323.8, a move above could see prices testing 324.7.
Trading Ideas:
--Copper trading range for the day is 320.3-324.7.
--Copper dropped as concerns about persistent oversupply outweighed upbeat Chinese economic data.
--China returned from several days of holiday to a spate of encouraging readings on its economy.
--U.S. CFTC data showed that hedge funds and money managers reduced their net short positions in COMEX copper in the week to Sept. 13.