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Comex copper loses ground, sliding to weak close

NEW YORK: Comex copper recouped some of the day's losses but spent most of Monday's session under selling pressure and moving closer to the lower end of its range.

"Over the last couple of days, as we've had this mini bull run, the funds have been getting longer and the stops are now starting to build up below," said one broker.

"A lot of this is still not based on fundamentals although there is more trade buying. It's still small compared to the technical business which is a little overbought," he added.

The active March copper contract closed at 84.65 cents a lb, down 0.75 cent, after trading between 84.00 and 85.45 cents. Spot January fell 0.60 cent to 83.95 cents.

The market rallied from its 83.30 cent settlement on Dec 21 up to 86.30 cents on Dec 30, while selling pressure continues to prevail in keeping prices within a 83.90 to 86.40 cent range.

Last week saw some attempts at pushing above the 86.00 cent level but if traders stay out of the buying scene, traders say profit taking and weaker prices will likely prevail in the near-term.

"Until we see concerted trade buying, you're going to have these pull backs. In the medium term you could see a serious pull back," said the broker. "These funds are just so long and I don't see who is going to buy in the face of illiquidation."

Key resistance is sitting at 85.70/85.80 cents with the greatest resistance at 86.40. Support is pegged at around 83.80 and 84.00 cents.

"It looks like locals are short," said one floor trader. "We're having a hard time getting it above 85.00 and London is down on the day," he added.

London trading extended its losses in late inter-office trading to fall $9 on the afternoon kerb. The three-months price was last quoted at $1,850/1,854 a tonne.

Final volumes were estimated at 11,000 contracts, compared with final volumes Friday estimated at 13,000 contracts and Thursday's tally of an estimated 10,000 contracts.

LME warehouse stocks were down 200 tonnes at 787,775 tonnes in Monday's report. Comex inventories on Friday were up 71 short tons at 93,154 tons.

The nine-day relative strength index for March copper eased lower to close at 42 at the end of business Monday after flirting with oversold conditions in midday trading. The RSI closed at 55 on Friday.

Technical analysts usually interpret an RSI reading at 70 or higher as indicating overbought conditions and a reading at 30 or lower as oversold.-Reuters