LONDON: Copper fell on Wednesday, snapping two days of gains on concerns that the recent price rally sparked by US president-elect Donald Trump's stated commitment to higher infrastructure spending had become overstretched.
The metal, widely used in construction, leapt to its highest since June 2015 in the wake of the US election and is up 15 percent so far this month, its strongest monthly gain since 2009. However, it failed to sustain a push above $6,000 a tonne.
Three-month copper on the London Metal Exchange was down 0.3 percent at $5,599 a tonne by 1110 GMT.
The Trump campaign published a paper about infrastructure plans ahead of the election referring to prospective spending on bridges, airports and digital superhighways, but did not mention specific projects.
"Copper has had the best run over the last few weeks, but the price move has been exaggerated," Commerzbank analyst Daniel Briesemann said.
"If Trump can implement only some of the infrastructure spending plans he announced during his election campaign, it would lead to higher demand for metals, but I don't think it is enough to change the global market so this is definitely overdone.
Prices should trade much lower."
The wider financial markets showed the diverging path of US and euro zone monetary policy on Wednesday, with Wall Street breaking new ground and the dollar perched near a 14-year high as German bond yields plumbed new record lows.
The dollar rallied sharply after the US elections on expectation that increased fiscal stimulus under a Trump administration could prove inflationary.
Like copper, it has since steadied off its highs. Copper inventories held in LME warehouses declined again on Tuesday, data from the exchange showed, falling 2,875 tonnes to their lowest since mid-August.
"LME copper inventory continues to fall, with total inventory standing at 242,275 tonnes," ING said in a note.
"This is down from this year's peak of 379,175 tonnes at the end of September."
Aluminium was up 0.1 percent at $1,761.50 a tonne. Reuters technical analyst Wang Tao said on Wednesday the metal may test resistance at $1,767 per tonne, a break above which could take it to the next resistance at $1,781.
Lead was 0.4 percent higher at $2,200.50 a tonne, while zinc was down 0.1 percent at $2,599.50 a tonne.
Zinc hit its highest in nearly seven years earlier this month and has surged more than 60 percent this year on the back of concerns over supply.
Elsewhere, nickel was down 0.1 percent at $11,355, while tin was up 0.7 percent at $21,200 a tonne.
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