Copper futures under pressure as Greece drama weighs

Investing.com - Copper prices edged lower on Monday, after last ditch Greek debt negotiations broke down over the weekend, bringing the country a step closer to a debt default ahead of a looming deadline for a repayment to the International Monetary Fund on Tuesday.

Copper for September delivery on the Comex division of the New York Mercantile Exchange lost 1.2 cents, or 0.44%, to trade at $2.624 a pound during European morning hours. Futures were likely to find support at $2.590, the low from June 25, and resistance at $2.658, the high from June 16.

Greece’s bailout is due to expire on Tuesday, the same day that Athens is due to repay €1.6 billion to the IMF, but without a rescue package in place Greece will almost certainly default.

Greek Prime Minister Alexis Tsipras abandoned negotiations with creditors on Saturday and called for a referendum to be held on July 5 on the terms proposed by lenders for extending the country’s bailout.

European finance ministers refused a request from the Greek government to extend the bailout program until after the referendum.

A Greek official said Monday that banks would remain closed for six days starting on Monday to avert a crisis in the banking sector after deposit outflows accelerated over the weekend. Withdrawals at ATM machines were to be limited to €60 a day per account.

European stock markets sank on Monday and the yields on Italian, Spanish and Portuguese bonds spiked amid mounting fears that Greece would become the first country to exit the euro zone.

Copper's losses were limited after the People's Bank of China cut its benchmark interest rate by a quarter percentage point to 4.85% over the weekend from 5.10%, in order to spur economic activity and boost growth.

It was the fourth rate cut since November, indicating that Beijing is becoming more aggressive in supporting the economy as its momentum slows and deflation risks rise.

The Asian nation is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.

Elsewhere, gold futures for August delivery inched up $3.50, or 0.3%, to trade at $1,176.70 a troy ounce, while silver futures for September delivery tacked on 4.5 cents, or 0.29% to trade at $15.81 an ounce.

On Friday, gold fell to a three-week low amid indications that the U.S. economy is regaining strength after a recent bout of weakness, supporting the case for higher interest rates later this year.

Expectations of higher borrowing rates going forward is considered bearish for gold, as the precious metal struggles to compete with yield-bearing assets when rates are on the rise.

Later Monday, the U.S. is to publish a report on pending home sales.