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LONDON: Copper prices jumped to their highest in nearly six months on Tuesday on a weaker dollar after a further decline in US inflation raised the likelihood of an easing in the pace of interest rate hikes.

Three-month copper on the London Metal Exchange (LME) gained 1.4% to $8,495 a tonne by 1700 GMT after touching its highest since June 23 at $8,629.

US Comex copper futures rose 1.6% to $3.86 per lb.

Copper raced higher after US data was released, having been up only 0.7% in LME midday official open-outcry trading.

US consumer prices barely rose in November after falls in gasoline and used car prices, leading to the smallest annual increase to inflation in nearly a year.

The dollar weakened after the data, making commodities priced in the US currency cheaper for buyers using other currencies.

“Risk appetite has received a bit of a jolt from another lower than expected inflation print, potentially leading to a slowdown in the pace of rate increases,” said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.

LME copper broke through key technical levels when it hit the intraday peak, he added.

“A close above the 200-day moving average and the November high, that would be quite a significant achievement, but I’m curious whether this can be sustained ahead of the Federal Open Market Committee meeting tomorrow.” The US Federal Reserve is expected to deliver a rate increase of 50 basis points on Wednesday after a series of 75-point increases.

Weighing on the market was uncertainty in top metals consumer China after it began relaxing coronavirus restrictions.

Companies in China were straining to keep operations running normally as COVID-19 infections rose.

“I think the market is confused as to how to approach the short-term outlook on China. On one hand, prices are supported because it’s reopening, but worried that we may go through period with a massive spike of cases,” Hansen said.

Among other metals, LME aluminium climbed 1.9% to $2,459 a tonne, zinc gained 1.3% to $3,311, lead added 0.9% to $2,199.50, tin advanced 2.2% to $24,475, but nickel tumbled 3.5% to $28,500.

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