Australian – HEDGE funds wreaked further havoc on base metal prices last night, sending copper higher in early London trade after two days of heavy losses fuelled by supply concerns from Mexico.
The price of copper on the London Metal Exchange was as much as 2 per cent higher in early trade, but still about 10 per cent below the record price reached on May 11, as trade volumes decline while speculative hedge funds desert the market.
Further gains by metal prices are likely to prompt a similar response in Asian trading today after copper and aluminium prices declined in Shanghai yesterday.
Gold dropped $US25.80 per ounce to a one-month low of $US640.70 after suffering its biggest drop since 1993, falling 5.4 per cent to $US637.50 an ounce in New York overnight on Wednesday.
“Hedge funds have done very well out of the surge in the copper price this year and it has been one hell of a ride,” one London-based metal trader said last night.
“The volatility is going up and this is frightening more than a few of the speculators out of the market. If you took all the speculators out, the price of copper would be nowhere near where it is at the moment and you would find the price for things like copper would be much, much lower.”
