Copper tumbles to 6-year low amid China stock market bloodbath
Investing.com - Copper prices plunged to the lowest level in six years on Monday, as steep declines on Chinese stock markets dampened appetite for the red metal.
Copper for September delivery on the Comex division of the New York Mercantile Exchange dropped to an intraday low of $2.232 a pound, a level not seen since July 2009, before trading at $2.246 during morning hours in London, down 5.7 cents, or 2.49%.
The Shanghai Composite tumbled almost 9% to a six-month low on Monday, wiping out this year's gains.
The drop came amid growing concerns over China's slowing economy and worries that Beijing may allow the yuan to continue to depreciate, fueling fears over a currency war that could destabilize the global economy.
Market players are also concerned that the plunge in the stock market could spread to other parts of the Chinese economy, triggering fears that the Asian nation's demand for the industrial metal will decline.
China is the world's largest copper consumer, accounting for almost 40% of world consumption last year.
Elsewhere, gold futures for December delivery dipped $5.60, or 0.48%, to trade at $1,154.00 a troy ounce. Losses were limited amid receding expectations that the Federal Reserve will raise U.S. interest rates next month.
Gold fell to a five-and-a-half year low of $1,072.30 on July 24 amid speculation the Fed will raise interest rates in September for the first time since 2006. But prices have since rebounded almost 9% on hopes of a delayed U.S. rate hike.
Some traders believe the U.S. central bank could postpone raising interest rates until December, as officials are likely to remain concerned over weak global growth and inflation pressures due to China's shock currency devaluation move and plunging oil prices.
A delay in raising interest rates would be seen as bullish for gold, as it decreases the relative cost of holding on to the metal, which doesn't offer investors any similar guaranteed payout.
The U.S. dollar index, which measures the greenback's strength against a trade-weighted basket of six major currencies, was down 0.45% early Monday to 94.41, the weakest level since June 22.
The greenback sold off sharply last week as concerns over the health of the global economy fanned hopes that the Fed could delay raising interest rates till the very end of 2015.
Crude oil futures traded at the lowest level since February 2009, as steep declines on China's stock market rattled investors' confidence.
The Asian nation is the world's second largest oil consumer after the U.S. and has been the engine of strengthening demand.
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