Copper prices tumble
Monday, 19 April 2010
LONDON, April 18 (Bloomberg): Copper fell the most seven weeks after regulators accused Goldman Sachs Group Inc. of fraud and as a rising dollar cut demand for the metal as a hedge against inflation.
Goldman Sachs misled investors about a financial product tied to subprime mortgages, leading to more than $1 billion in losses, the US Securities and Exchange Commission said today in a statement describing its civil case. Goldman Sachs is one of Wall Street's biggest traders and brokers of raw materials. The dollar rallied as much as 0.7 per cent against the euro.
"The news has hit like a bomb on the financial and commodity markets," said Michael McDougall, a senior vice president at broker Newedge USA in New York. Metal prices and equities tumbled in London and New York after the SEC said it filed the civil fraud suit against Goldman Sachs.
Copper futures for July delivery slid 8.55 cents, or 2.4 per cent, to $3.5355 a pound on the Comex in New York, the biggest drop for a most-active contract since Feb. 23. The decline in copper, down 1.5 per cent for the week, accelerated on concern that the effects of Goldman Sachs case may be extensive.
"This is not good for commodities," said Michael Pento, the chief economist at Delta Global Advisors. He correctly predicted the 2008 price collapse in raw materials. "It could be the case that traders stop making trades with Goldman."
The Reuters/Jefferies CRB Index of 19 commodities tumbled as much as 1.6 per cent. The Standard & Poor's 500 Index of equities sank as much as 2.1 per cent and New York-based Goldman Sachs plunged as much as 16 per cent.
Copper slid early after the government in China raised minimum rates on mortgage loans and down payments for second homes, saying "more forceful" steps are needed to cool speculation after property prices rose at a record pace in March. The metal also fell as the dollar advanced as much as 0.5 per cent against a basket of six major currencies, including the euro, curbing purchases of commodities as alternative assets.
"People get concerned when they hear about steps to tighten in China," said Michael K. Smith, the president of T&K Futures & Options in Port St. Lucie, Florida. "The stronger dollar is not helping either. Prices could continue to correct for the next few trading days." In New York, copper has surged 62 per cent in the past year.
On the London Metal Exchange, copper for delivery in three months fell $185, or 2.3 per cent, to $7,760 a metric ton ($3.52 a pound). Aluminum, lead, nickel and zinc declined.
Goldman Sachs misled investors about a financial product tied to subprime mortgages, leading to more than $1 billion in losses, the US Securities and Exchange Commission said today in a statement describing its civil case. Goldman Sachs is one of Wall Street's biggest traders and brokers of raw materials. The dollar rallied as much as 0.7 per cent against the euro.
"The news has hit like a bomb on the financial and commodity markets," said Michael McDougall, a senior vice president at broker Newedge USA in New York. Metal prices and equities tumbled in London and New York after the SEC said it filed the civil fraud suit against Goldman Sachs.
Copper futures for July delivery slid 8.55 cents, or 2.4 per cent, to $3.5355 a pound on the Comex in New York, the biggest drop for a most-active contract since Feb. 23. The decline in copper, down 1.5 per cent for the week, accelerated on concern that the effects of Goldman Sachs case may be extensive.
"This is not good for commodities," said Michael Pento, the chief economist at Delta Global Advisors. He correctly predicted the 2008 price collapse in raw materials. "It could be the case that traders stop making trades with Goldman."
The Reuters/Jefferies CRB Index of 19 commodities tumbled as much as 1.6 per cent. The Standard & Poor's 500 Index of equities sank as much as 2.1 per cent and New York-based Goldman Sachs plunged as much as 16 per cent.
Copper slid early after the government in China raised minimum rates on mortgage loans and down payments for second homes, saying "more forceful" steps are needed to cool speculation after property prices rose at a record pace in March. The metal also fell as the dollar advanced as much as 0.5 per cent against a basket of six major currencies, including the euro, curbing purchases of commodities as alternative assets.
"People get concerned when they hear about steps to tighten in China," said Michael K. Smith, the president of T&K Futures & Options in Port St. Lucie, Florida. "The stronger dollar is not helping either. Prices could continue to correct for the next few trading days." In New York, copper has surged 62 per cent in the past year.
On the London Metal Exchange, copper for delivery in three months fell $185, or 2.3 per cent, to $7,760 a metric ton ($3.52 a pound). Aluminum, lead, nickel and zinc declined.