Copper prices drop on China data, demand worries

Copper prices were lower Tuesday as investors worried about demand from China as new data showed that manufacturing activity dropped in May and property sales were down in Bejing, Shanghai, and Shenzhen.

A key Purchasing Managers’ Index was at 53.9 in May, down from 55.7 in April, indicating that while manufacturing activity remains in expansion, it is slowing down, while property sales in three large cities dropped by as much as 70 percent in May due to tightening monetary policy meant to slow down the economy in China.

July contracts for copper, the most active contract in New York trade, fell 4 cents to $3.05 per pound, while three-month contracts on the London Metal Exchange dropped $189 to $6,750 per tonne

The declines for copper came even though Goldman Sachs predicted that the price of the metal used primarily in manufacturing and construction, could reach $7,755 per tonne by the end of the year.

On the other hand, the price of gold was higher on the session as investors looked for safe places to put their cash as they worried about how long it will take to mend Europe’s economy as the euro reached a four-year low and after the European Central Bank warned late Monday that banks in the Eurozone could be forced to write down more debt.

August gold was $11.90 higher to $1,226.90 per troy ounce in New York, with most purchases being for investment purposes as higher prices reduced purchases for use in making jewelry.

The Bombay Bullion Association said that gold imports in May were around 17 to 18 short tons, down from 28.6 short tones a year ago.

Meanwhile, July platinum traded flat at $1,549.40 per troy ounce in New York and September palladium dropped $1.30 to $462.15 per troy ounce.