LONDON: Copper prices rose from 10-week lows on Tuesday as investors waited to find out if Federal Reserve chair Jerome Powell will give guidance on the pace of US monetary tightening in testimony to Congress beginning at 1800 GMT.
Signals from the Fed that it would start raising interest rates sooner than expected sent prices of riskier assets, including equities and metals, tumbling last week.
They also boosted the dollar, making metals costlier for buyers outside the United States.
Benchmark copper on the London Metal Exchange (LME) reached a record high of $10,747.50 a tonne in May but fell 8.6% last week and touched a low of $9,011 a tonne on Monday.
At 1629 GMT on Tuesday, it was up 1% at $9,275.50 a tonne.
“We’re seeing a healthy correction,” said Saxo Bank analyst Ole Hansen. The uptrend at around $8,700 provided technical support and “underlying fundamentals still point to higher prices,” he said.
World shares edged higher and the dollar was steady, while in China, the biggest metals consumer, the yuan fell to its weakest against the dollar since early May.
“Copper prices have peaked in 2Q and will ease into the second half of the year as the recent demand recovery moderates and supply improves. We maintain our year-end target price of $7,550,” analysts at JPMorgan said in a note.
“China’s domestic market shows every sign of a glut,” they said.
China’s state reserves administration said it would publicly auction 20,000 tonnes of copper, 30,000 tonnes of zinc and 50,000 tonnes of aluminium, on July 5-6. It is the first round of sales designed to limit price rises.
The copper market was in deficit in March, while in April the nickel and zinc markets were in deficit and lead was oversupplied, study groups tracking supply and demand said.
LME aluminium was up 0.9% at $2,424.50 a tonne, zinc was 0.8% higher at $2,859.50, nickel rose 1.7% to $17,745, lead gained 0.7% to $2,172 and tin was up 0.8% at $30,330.—Reuters
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