LONDON: Copper prices jumped on Wednesday to the highest in over five weeks after data showed US inflation was weaker than expected, stoking hopes that interest rate hikes would be less aggressive and easing fears of a recession.
Three month copper on the London Metal Exchange gained 1.3% to $8,089 a tonne by 1630 GMT, the highest since July 1, after earlier easing to $7,889.
US Comex futures climbed 1.9% to $3.65 a lb.
US consumer prices did not rise in July compared with expectations of economists that the monthly gain would be 0.2%, a report that could allow the Federal Reserve to dial down the size of interest rate hikes in September.
“The prospect for interest rates in the US peaking at a lower level than previously thought is helping sentiment,” said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.
“Copper got a shot in the arm after a surge in risk appetite and after the dollar took a tumble.” The dollar index fell more than 1%, making commodities priced in the US currency cheaper for buyers using other currencies.
Earlier, copper and aluminium prices dipped after data from top metals consumer China highlighted a weak construction sector.
The construction sector is a key demand driver for both copper and aluminium.
LME aluminium failed to get as much of a boost as copper from the US inflation data, edging up 0.1% to $2,493 a tonne.
The premium of cash LME zinc over the three month contract rose to $127 a tonne, the highest since late June, indicating tightness in near-term LME supplies as investors worry that high energy prices will force smelters to curb output.
Benchmark LME zinc advanced 2.2% to $3,614.50 a tonne, its highest level since June 22.
LME nickel gained 4.4% to $22,500 a tonne, tin rose 0.5% to $24,550 and lead added 0.6% to $2,178.50.
Comments
Comments are closed.