The International Monetary Fund (IMF) and finance ministers from the euro zone seek to announce the second bailout package for Greece on Monday, but they will first have to agree if some of the countrys official loans might eventually be waived to reduce its debt. Although German chancellor Angela Merkel and French finance minister have spoken positively about sealing a deal, investors were cautious after wagering on risky assets such as commodities last week.
However, latest data showing China's manufacturing sector posted growth and expanding factory activity signalled the world's top metals consumer is rebounding after seven straight quarters of slowdown. This has prevented any slump in commodity prices. Investors are now focussing on Chinas official purchasing manufacturers' index (PMI) due later this week, for further confirmation of the trend.
Three-month copper on the London Metal Exchange fell $2.5 to $7,774.50 a tonne by 1135 GMT on Friday. Prices have risen nearly 3% over the last fortnight, as investors bet China, which accounts for around 40% of the world's refined copper demand, would pursue growth vigorously after the leadership transition earlier this month. However, investors are also mindful of high copper inventory in the country's bonded warehouses, which hit a record high of more than 1 million tonnes this month.
However, tin gained 0.14% to $20,880 a tonne, while zinc, used in galvanizing, rose 1.48% to $1,990.
Gold, too, eased on Monday as investors sought to book profits after the prices hit a more than one-month high in the previous session. They are also awaiting outcome of negotiations between the White House and Congress this week to avoid the US fiscal cliff a series of automatic tax hikes coupled with reduction in spending worth $600 billion set for January, which many believe could potentially drive the economy back into recession.
Spot gold tumbled $4.98 an ounce to $1,747.41 by 1118 GMT after rising to $1,754.10 on Friday, its loftiest since October 12. US December gold futures fell $3.60 an ounce to $1,747.80. Although the precious metal has been tracking the euro for quite a while now, Monday was an exception as gold defied a rally in the euro. Gold has risen by around 11% this year, mainly on expectations the US monetary policy would remain loose. Silver lost 0.23% in intraday trade on Monday at $34.02 an ounce. Spot platinum was down 0.49% at $1,606.74 an ounce, while spot palladium dropped 0.57% at $658.2 an ounce.
Similarly, brent crude oil declined 30 cents to $111.08 a barrel in intraday trade, while US crude oil futures fell 39 cents to $87.89.