LONDON: Copper prices snapped a three-day losing streak on Thursday, boosted by a weaker dollar and optimism that stimulus measures would boost demand in top metals consumer China.
Three month copper on the London Metal Exchange rose 0.6% to $7,735 a tonne in official open-outcry trading.
The dollar index dropped after Japan intervened in the currency market to shore up the battered yen for the first time since 1998.
A weaker dollar supports commodities priced in the greenback by making them cheaper for buyers using other currencies.
“A weaker dollar is definitely helpful, the question mark is how long that can be sustained when you’ve got the Fed being aggressive with rate increases,” said Nitesh Shah, commodity strategist at WisdomTree in London.
“Chinese data may be giving some hope that its loosening monetary and fiscal policy is starting to bear some fruit in terms of final demand for industrial metals.”
Aluminium falls to 18-month low as markets brace for U.S. rate rise
Shanghai on Tuesday announced 1.8-trillion-yuan investment worth of infrastructure projects, heeding national policymakers’ calls to revive sluggish economic growth. The construction industry consumes a vast amount of metals.
“Onshore (Chinese) sentiment is largely positive. It’s also a function of people deploying capital post FOMC (Federal Open Market Committee) event,” said analyst Zenon Ho at broker Marex, referring to the U.S. Federal Reserve’s rate hike.
Fed Chair Jerome Powell vowed on Wednesday to bring down inflation, as the U.S. central bank raised interest rates by three-quarters of a percentage point for a third straight time and signaled that borrowing costs would keep rising this year.
The Fed’s hawkish outlook for more interest rate increases put a cap on price gains on the LME, Shah added.
But historically low inventories of metals and smelter shutdowns due to high power prices were supporting the market, he added.
The global refined copper market showed a 30,000-tonne deficit in July, bringing the deficit level in the first seven months of the year to 126,000 tonnes, data showed.
In other metals, LME aluminium gained 0.5% in official activity to $2,214.50 a tonne, zinc added 0.7% to $3,119, lead advanced 2.7% to $1,887, tin climbed 2% to $21,600, but nickel shed 1.6% to $24,555.
Comments
Comments are closed for this article.