Investing.com - Copper prices edged higher on Tuesday, after a pair of disappointing manufacturing reports underlined concerns over the health of China's economy.
The downbeat data reinforced the view that the economy remains in the midst of a gradual slowdown which will require Beijing to roll out more support in coming months.
Copper for March delivery on the Comex division of the New York Mercantile Exchange tacked on 1.2 cents, or 0.6%, to trade at $2.060 a pound during morning hours in London. A day earlier, copper lost 0.9 cents, or 0.44%, as a stronger U.S. dollar weighed.
Meanwhile, three-month copper on the London Metal Exchange inched up 0.14% to $4578.50 a metric ton.
The Caixin manufacturing purchasing managers’ index for November rose to 48.6 from 48.3 in October. Despite the modest uptick, activity still contracted for the ninth straight month, fueling fears the economy may still be losing momentum despite a raft of stimulus measures in recent months.
Meanwhile, the official manufacturing purchasing managers' index declined to a three-year low of 49.6 in November from 49.8 a month earlier. Analysts had expected a reading of 49.8 last month.
A reading below 50.0 indicates industry contraction. Copper traders view Chinese factory activity as an indicator of the nation's copper demand, as the red metal is widely used by the sector.
Prices of the red metal lost almost 11% in November as expectations of higher interest rates in the U.S. and slower global economic growth, especially in China, weighed.
The Asian nation is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.
Elsewhere in metals trading, gold rose from near six-year lows on Tuesday, as the U.S. dollar pulled back from an eight-month high.
Gains were limited as market players braced for a hike in interest rates by the Federal Reserve later this month. Gold slumped approximately 7% in November, amid mounting expectations the Fed will raise rates for the first time in nearly a decade at its mid-December meeting.
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.
In the week ahead, investors will be focusing on Friday’s U.S. nonfarm payrolls report for November, the last jobs report before the Fed decides on interest rates at its December 15-16 meeting.
Market players will also pay close attention to a speech by Fed Chair Janet Yellen on Wednesday and congressional testimony on Thursday.
The outcome of Thursday’s European Central Bank meeting will also be in focus amid speculation the central bank could ramp up its monetary stimulus program.