Copper Drops as Earnings Fuel Economic Worries

Source:

"Gold was one of the only metals that made gains Tuesday. . ."

Copper futures dropped Tuesday in New York for a second session, as gloomy earnings reports from Caterpillar Inc. and its peers fueled economic fears, reducing demand for the critical industrial metal. Gold rose for a second session.

Construction and mining-equipment firm Caterpillar reported a first-quarter loss Tuesday, compared with a profit a year earlier. It also cut its sales outlook.

May copper fell 5.35 cents, or 2.5%, to $2.05 a pound in North American electronic trading. It lost as much as 4.3% earlier. The contract has slumped more than 6% in the first two sessions of the week.

June gold rose $6.50, or 0.7%, to $894.

"The sell-off in [base] metals was attributable to the less-than-stellar" U.S. economy, said Edward Meir, an analyst at MF Global. "Recent U.S. macro numbers have been unusually soggy, and thus capable of reversing the price gains made in recent weeks."

Copper has mostly been on the rise since February on hopes that the economic crisis has bottomed. Prices rose above $2 a pound earlier this month for the first time in more than five months, up more than 40% from February's low below $1.40.

But as hopes for a swift economic recovery dimmed, copper has moved lower.

The global financial crisis is far from over, a new report by the International Monetary Fund showed Tuesday. The IMF said financial institutions now face total losses of $4.1 trillion on loans and other assets.

The IMF estimated that total write-downs on U.S. assets would reach $2.7 trillion, up from the $2.1 trillion it estimated in January and almost double what it forecast in October.

Gold was one of the only metals that made gains Tuesday, as investors turned to the yellow metal for safety.

Silver for May delivery fell 6.5 cents, or 0.5%, to $12.04 an ounce. June palladium slid 75 cents, or 0.3 %, to $225.25 an ounce. July platinum lost $14.10, or 1.2%, to $1,153 an ounce.

Elsewhere, holdings in SPDR Gold Trust (GLD) stood at 1,105.98 tons Monday, unchanged from a day earlier, according to the latest data from the fund.

In Tuesday trading, SPDR rose 0.3% to $87.18.

Related Articles

Get Our Streetwise Reports Newsletter Free

A valid email address is required to subscribe