Copper Declines in Asia as Climb to 10-Month High Seen Overdone

By Glenys Sim

July 28 (Bloomberg) -- Copper slipped in Asia as some investors sold the metal to lock in gains after it climbed to the highest level in almost 10 months yesterday on optimism about a global economic recovery.

Copper’s 14-day relative strength index climbed to more than 70 yesterday, a level some investors use as a signal that prices are about to drop. The best performer on the London Metal Exchange advanced to $5,646 a metric ton yesterday, the highest price since Oct. 8, after acceleration in China’s economic growth and better-than-expected U.S. earnings fueled hopes the global recession is easing.

“The rise in equities and commodities are feeding off each other,” Wang Xiaoli, analyst at Goldbull Futures Co., said from Shenzhen today. “The trend is still for higher prices, although we may see some profit-taking in between.”

Three-month delivery copper on the London Metal Exchange fell as much as 0.6 percent to $5,565 a ton and traded at $5,574.75 a ton at 10:47 a.m. in Singapore. The metal gained 12.5 percent in July, heading for the longest monthly rally since the eight-month winning streak ended January 2006.

Copper for September delivery in New York slid 0.3 percent to $2.5375 a pound at the same time, after climbing to $2.5790 a pound yesterday, a level not seen for a most-active contract since Oct. 7.

November-delivery copper on the Shanghai Futures Exchange lost as much as 1.1 percent to 44,430 yuan ($6,504) a ton, snapping a three-day rally. The contract traded at 44,600 yuan at 10:52 a.m. in Singapore.

U.S. stocks advanced yesterday, extending the Dow Jones Industrial Average’s best two-week rally since 2000 following the biggest jump in U.S. new-home sales in eight years. The regional benchmark MSCI Asia Pacific Index is set for an 11th consecutive gain, the longest winning streak since January 2004.

Among other LME-traded metals, zinc fell 0.3 percent to $1,705 a ton, nickel was down 1.5 percent at $16,701 a ton and tin declined 0.7 percent to $14,500 a ton. Aluminum added 0.2 percent to $1,830 a ton while lead hadn’t traded as of 10:55 a.m. in Singapore.

To contact the reporter on this story: Glenys Sim in Singapore at gsim4@bloomberg.net