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Copper reached a six-year higher yesterday, and dealers used this as an excuse to close out their long positions and secure their profits. It would appear that copper has found resistance around the 318 cents per pound level; it has made several unsuccessful attempts to break through the mark in the past month, and this may be the reason why traders sold out today.
Overnight the Chinese government stated it will assist the country’s economy by funding road and rail projects to ensure an annual growth rate of at least 7%. According to the HSBC manufacturing purchasing manager’s index (PMI) survey, manufacturing is at a nine-month low, and some economists are concerned for China’s future growth rate. Beijing stated that any spare building materials will be used for infrastructure projects, but this announcement failed to push copper higher. Some traders feel it is not a sustainable long-term solution for the government to prop up the economy through construction schemes that are unnecessary.