The base metals were all mired in red on Wednesday. Copper was in the green until the late pre-dawn hours, but then declined through most of the day, to finish just off its intraday lows at $2.0099/lb., down 5 cents.

Nickel followed copper closely, closing at its intraday low of $5.586/lb., down 25 2/3 cents. Zinc tumbled to its intraday low of $0.657/lb., down 2¾ cents. Aluminum was weak, shedding more than three-quarters of a cent, to $0.6687/lb., while lead rounded out the down day by giving up a penny and a half, to $0.6517/lb.

Copper led the industrial metals lower, as the disappointing retail sales report crushed feelings of optimism about the economy. The metal is now off 7.1% in the past five sessions on signs that a rebound in the global economy may not be as forthcoming as thought.

The sales figures “add to the list of reasons why the recovery won’t be as strong as people had been expecting,” said Michael Pento, the chief economist at Delta Global Advisors in Holmdel, New Jersey. “I wouldn’t be surprised to see copper consolidate and head a bit lower.”

Pento added that, “The most salient point for the copper price was when we started to see a depreciation in the dollar … A falling dollar will push commodities higher, not from a demand standpoint, but from the standpoint of inflation.”

Stewart Solaka, of LaSalle Futures Group in Chicago, advanced a technical point of view, saying that, “Broader weakness in the market was hitting copper. But copper also tested $2.20 (resistance) two times and failed to get above it. It pulled back to a trendline low and is practically touching it right now.”

Solaka said the S&P index and copper prices are critical, with both numbers hovering above their key lows. “These are very significant areas for both of them, that are either hold or break,” he maintains.

Stockpile data continued to be supportive, though. Copper inventories monitored by the LME fell by 5,275 metric tons yesterday, to 373,750 tons.

Source: Base Metals See Red