Copper falls for 2nd day in London on speculation prices rose too high

Copper fell for a second day in London on speculation prices climbed too high last week when markets were closed in China, the world’s biggest consumer of the metal.

Prices gained for a third week last week, the longest streak since July, lifting copper’s 14-day relative strength index above the level that signals a potential impending drop to some analysts who study technical charts. The metal also slid today as China signaled caution on monetary loosening and the euro retreated against the dollar.

“The market got carried away with itself while China was on holiday,” said Angus Staines, an analyst at UBS AG in London. “Prices are a little bit high to entice the buyers” in the Asian nation, he said.

Copper for three-month delivery declined 1.7 per cent to $8,379 a tonne by 10:21 am on the London Metal Exchange. Prices increased 3.7 per cent last week, driving the RSI above 70 on January 26. Copper for March delivery fell 2.1 per cent to $3.8075 a pound on the Comex in New York.

Economists at Barclays Capital Asia Ltd were among those who predicted earlier this month China would ease reserve requirements before the week-long Lunar New Year holiday that ended January 28. LME copper rose 5.3 per cent on November 30, when the Chinese central bank lowered the reserve requirement for the first time since 2008.

EU Summit
The euro dropped as much as 0.8 per cent against the dollar before European Union leaders gather for their first summit of 2012. Declines by the euro against the greenback make dollar- priced metals more expensive for users of the single European currency.