Copper Falls Most in 11 Weeks on Bets Rally to 27-Month High Was Overdone

Copper prices fell the most in 11 weeks on concern that this week’s rally to a 27-month high was overdone.

The 14-day relative-strength index, a gauge of price momentum, was above 70 in the two previous days, indicating the metal was poised to drop. Yesterday, copper reached $3.7895 a pound, the highest level since price since July 11, 2008. The price jumped 24 percent in the third quarter.

“These rallies are starting to look tired,” said Michael K. Smith, the president of T&K Futures & Options in Port St. Lucie, Florida. “Technically, we are overbought and due for a quick correction.”

Copper futures for December delivery fell 7.35 cents, or 2 percent, to close at $3.6795 at 1:23 p.m. on the Comex in New York, the biggest decline for a most-active contract since July 16.

The rally probably will resume, sending prices above the record $4.2605 within six months, because of the dollar’s slump and rising demand from emerging markets including India, Brazil and China, the world’s largest metal user, Smith said.

Deteriorating mine productivity is “among the most important constraints on supply,” the International Monetary Fund said yesterday in a report. “The medium-term balance of risks for prices should remain tilted toward the upside.”

On the London Metal Exchange, copper for delivery in three months dropped $159, or 1.9 percent, to $8,100 a metric ton （$3.67 a pound）.

Copper above $8,000 is “not stable” because that level is “many times above the cost of production,” said Viktor Sprogis, the deputy chief executive officer at OAO GMK Norilsk Nickel in Moscow. The company supplies about 3 percent of global copper.

Aluminum, lead, nickel, tin and zinc also fell on the LME.