Copper Loses Ground for Fear that China Wants to Limit Commodity Prices

Copper fell on Monday on the fear that China, the largest consumer of metals, wants to put caps on commodity prices to avoid possible inflation. The market is also pressured by faltering demand and higher inventories of the metal.

Three-month copper on the London Metal Exchange declined by 0.6% at $8.875 a tonne. The metal accumulated a 30% rise in the last five months. In February, it reached $9,617, a maximum of nine and a half years.

Copper in Shanghai closed 1.8% lower at 65,690 yuan a ton.

Ole Hansen, a strategist at Saxo Bank, stated that now investors are watching very high PPI numbers, both from China and the United States. Besides, Beijing’s potential implementation of measures to curb commodity-driven inflation is in focus. 

According to data released Friday, prices at Chinese factories rose in March at their fastest annual pace in nearly three years.

Chinese Premier Li Keqiang stressed the need to strengthen the commodities market regulation to ease pressure on companies amid rising global input prices.

Metals markets had celebrated US President Joe Biden’s plan to spend $2.3 trillion to improve American infrastructure, but Republicans have been cautious.

LME copper inventories touched their highest level in five months on Monday, after stocks more than doubled since the beginning of March.

Signs of weak demand in China also pressured the market. The Yangshan copper premium fell to $51 a ton, its lowest level since November 20.

Gold Price Falls to $1,729.45 an Ounce

Gold prices fell on Monday as higher US Treasury yields reduced the bullion’s appeal. Investors await key data on inflation and retail sales from the world’s largest economy.

Spot gold lost 0.6% to $1,729.45 an ounce. Gold futures in the United States dropped by 0.7% to $1,732.70 an ounce.

According to Georgette Boele, an ABN Amro analyst, as long as US debt returns are relatively high, gold prices will be meager. Boele added that the market is awaiting US consumer price data in March today.

The United States will release retail sales data on Thursday.

Gold is a hedge against inflation. However, rising Treasury debt yields have been threatening that status as they carry a higher opportunity cost of owning bullion.

Among other precious metals, silver lost 1.7% to $24.82 an ounce; palladium gained 1.3% to $2,674.68 an ounce; platinum dropped by 2.3% to $1,170.90 an ounce after sinking earlier in the session to a nearly two-week low of $1,164.50.