LONDON: Copper edged up to a one-week high on Tuesday as speculators followed short-term bullish signals, but gains were capped by weak factory activity in top metals consumer China.
Three-month copper on the London Metal Exchange (LME) was up 0.3% at $8,619 a tonne by 1100 GMT after touching $8,714 for its strongest since April 25.
Trading volume was thin, with the Shanghai Futures Exchange shut for a national holiday.
LME copper last week touched its lowest level in nearly four months before rebounding.
“The bounce from support was significant, so if you’re trading it you’re looking to try to get back toward $9,000, but the chances are that rally will fail,” said Dan Smith, head of research at Amalgamated Metal Trading.
“I’m bullish for the year, I think we’ll be in a down draft for the next couple of weeks. It’s partly because of seasonality, but also because of the ramp up of copper concentrate in some of the key places like Peru and DRC.”
Copper hits 1-week high, China holiday keeps trading volume low
Also weighing on the market was data showing China’s manufacturing activity shrank unexpectedly in April, raising pressure on policymakers seeking to boost an economy struggling for post-COVID lift-off.
“We believe that the government will resume subsidies on electric vehicles, which would benefit both the manufacturing and services sectors. The government might also push infrastructure construction faster,” ING economists said in a note.
The market was also nervous about whether the U.S. Federal Reserve will indicate this week that it expects a pause in interest rate hikes after a widely expected increase of 25 basis points.
In other metals, aluminium slipped 0.2% to $2,352.50 a tonne, zinc dropped 1.3% to $2,614.50 and nickel shed 0.8% to $24,015. Lead gained 0.5% to $2,158 and tin was up 0.3% at $26,155.
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