Copper futures fell, snapping the longest rally in nine years, as audit findings of false gold trades in China spurred concerns that commodity financing may dry up, curbing demand for metals.
China’s chief auditor discovered 94.4 billion yuan ($15.2 billion) of loans backed by falsified gold transactions, adding to signs of possible fraud in commodity financing deals. Public security authorities have probed alleged fraud at Qingdao Port, where copper and aluminum stockpiles may have been pledged multiple times as collateral for loans.
“The market is a little bit nervous with the news about the gold financing in China,” Bill O’Neill, a partner at Logic Advisors in Upper Saddle River, New Jersey, said in a telephone interview. “That brings a weaker tone across the board” for metals, he said.
Copper futures for September delivery dropped 0.1 percent to $3.164 a pound at 11:04 a.m. on the Comex in New York. The price rose in the previous nine sessions, the longest rally since June 2005. Gold, silver and platinum also fell today.
On the London Metal Exchange, copper for delivery in three months rose 0.2 percent to $6,930 a metric ton ($3.14 a pound).
Inventory tracked by the LME has tumbled 57 percent this year to the lowest since August 2008.
Aluminum and tin fell in London, while lead, nickel and zinc gained.
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