Copper futures decline, but China stimulus hopes support

Investing.com - Copper futures declined on Tuesday, as traders cashed out of the market to lock in gains following Monday’s strong rally that took prices to a five-week high .

Losses were limited amid hopes policy makers in China will introduce fresh easing measures to boost growth in the world’s second largest economy and largest consumer of the industrial metal.

On the Comex division of the New York Mercantile Exchange, copper futures for September delivery traded at USD3.169 a pound during European morning trade, down 0.5% on the day.

New York-traded copper prices held in a range between USD3.164 a pound, the daily low and a session high of USD3.194 a pound.

Comex copper rallied on Monday to hit USD3.204 a pound, the strongest level since June 18, as the U.S. dollar weakened broadly after data showed that U.S. existing home sales fell unexpectedly in June.

Fed Chairman Ben Bernanke said last week that the pace of its bond purchases would depend on U.S. economic health.

The Fed’s stimulus program is viewed by many investors as a key driver in boosting the price of commodities as it tends to depress the value of the dollar.

The red metal remained support after Chinese Premier Li Keqiang said that the government would take action to make sure economic growth does not go below the 7%-threshold.

The premier told the State Council at a meeting last week that a "reasonable" 7.5% growth target was set with the aim of maintaining labor market stability,

The Asian is scheduled to release closely-watched data on manufacturing sector activity on Wednesday.

China is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.

Elsewhere on the Comex, gold for August delivery shed 0.5% to trade at USD1,328.55 a troy ounce, while silver for September delivery fell 1.4% to trade at USD20.23 a troy ounce.