Copper tumbles to 3-month low as Greece default fears grow

Investing.com - Copper prices tumbled to a three-month low on Monday, after last ditch talks between Greece and its international creditors ended without an agreement on a cash-for-reforms deal on Sunday night.

Failure to strike a deal would result in Greece defaulting on payments and exiting the euro zone.

On the Comex division of the New York Mercantile Exchange, copper for July delivery hit an intraday low of $2.634 a pound, a level not seen since March 19, before trading at $2.639 during European morning hours, down 3.9 cents, or 1.47%.

On Friday, copper tacked on 0.9 cents, or 0.34%, to close at $2.678. Futures were likely to find support at $2.595, the low from March 19, and resistance at $2.684, the high from June 12.

Talks in Brussels between Greece and European Union representatives failed to reach an agreement on pension reforms, budget targets and tax rates, adding to fears over a debt default that would threaten Greece’s future in the euro zone.

Europe wants Greece to make spending cuts worth €2 billion, to secure a deal that will unlock additional funds before its bailout expires at the end of June and it must repay €1.6 billion to the International Monetary Fund.

EU officials blamed the collapse in talks on Greece, saying it had failed to offer any new reforms to secure the funding it needs.

In a newspaper interview published on Monday Greece Finance Minister Yanis Varoufakis ruled out a Greek exit from the euro area, adding that debt restructuring was the only way forward.

Investors were looking ahead to a meeting of euro zone finance ministers on Thursday, which was being seen as Greece's last chance to strike a deal.

Elsewhere, gold futures for August delivery dipped $1.20, or 0.1%, to trade at $1,178.00 a troy ounce, while silver futures for July delivery rose 5.8 cents, or 0.37% to trade at $15.88 an ounce.

The dollar was supported as investors looked ahead to the outcome of Wednesday’s monetary policy meeting and rate statement by the Federal Reserve for a clear signal on when it could start to raise interest rates.

Recent economic reports have indicated that the U.S. economy was regaining strength after contracting in the first quarter, fuelling speculation that the U.S. central bank could raise rates as soon as September.

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.