Copper prices started to rally in mid-December and this continued until mid-January, during which time we witnessed a move from 6,280 dollars/tonne to 7,440 dollars/tonne - a rise of some 18 percent. When equities started to suffer in early January, copper initially proved relatively resilient. It was only after the equity rout on January 15 that coincided with the end of the commodity index funds' rebalancing, that copper prices started to fall. As the selling in the equities became more panicky, investors moved into risk reduction mode and all asset classes came under pressure. This saw copper prices fall back to a low of 6,660 dollars/tonne on January 22 before the Fed's 75 basis point interest rate cut turned the market higher again. However, throughout the correction in copper, dips continued to attract good scale down buying, which suggested the under-tying fundamentals that had turned prices higher in mid-December were still active.
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