Copper futures fall to 3-week low on firm dollar

Investing.com - Copper prices fell to the lowest level in almost three weeks on Tuesday, as a broadly stronger U.S. dollar dampened the appeal of the red metal.

On the Comex division of the New York Mercantile Exchange, copper for July delivery hit an intraday low of $2.861 a pound, the weakest level since April 30, before paring losses to trade at $2.869 during European morning hours , down 3.8 cents, or 1.3%.

A day earlier, copper shed 1.8 cents, or 0.62%, to close at $2.906. Futures were likely to find support at $2.788, the low from April 30, and resistance at $2.949, the high from May 18.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.85% to hit 95.03, moving off last week's four-month low of 93.16.

A stronger dollar reduces demand for raw materials as an alternative investment and makes dollar-priced commodities more expensive for holders of other currencies.

Later in the day, the U.S. was to publish data on April building permits and housing starts, as investors look for fresh indications on the strength of the economy.

Market players also awaited the release of the minutes of the Federal Reserve’s April meeting on Wednesday, as well as U.S. inflation data on Friday, for further clues on the timing of a U.S. rate increase.

Recent economic reports have indicated that the economy has slowed since the start of the year, prompting many investors to push back expectations on the timing of an initial rate hike by the Fed.

Elsewhere, gold futures for June delivery dipped $5.20, or 0.42%, to trade at $1,222.40 a troy ounce, while silver futures for July delivery slumped 26.7 cents, or 1.51% to trade at $17.46 an ounce.

Fears over a Greek debt default continued to dominate market sentiment even after the country’s labor minister said Tuesday that an agreement with its lenders would soon be reached.

Athens is scrambling to reach a cash-for-reform deal with its international lenders in time to avoid a cash crunch.