LONDON: Copper prices rebounded on Friday on hopes that US politicians will seal a deal to avert a federal debt default and as investors adjusted positions ahead of the weekend.
Three-month copper on the London Metal Exchange (LME) was up 1% at $8,254.50 a tonne by 1600 GMT after sliding 1.6% in the previous session.
US Comex copper futures rose 1.1% to $3.73 a lb.
Wider financial markets marched higher after Democratic negotiators told President Joe Biden on Friday that they are making “steady progress” in talks with Republicans in an effort to avoid a US default.
Later on Friday, a Republican said talks had been paused, while the White House said a deal remained possible.
“We’ve seen this so many times; both sides of the aisle show some brinkmanship, but then come together for a deal,” said Nitesh Shah, a commodity strategist at WisdomTree.
“A lot of cyclical assets are moving one day up, one day down, dependent on what’s going on with the debt situation. Markets are nervous, there’s a high risk of an accident.” A slightly weaker dollar index also supported the market, making commodities priced in the US currency cheaper for buyers using other currencies.
Also boosting the market were some speculators closing out short-term bearish positions ahead of the weekend, one trader said.
The copper market however faces headwinds in the coming weeks, with weak demand in China and potential recession in the United States and Europe, analysts said.
“Along with weak Chinese demand, a strong US dollar on the back of robust US economic data and hawkish comments from the Fed have placed a cap on copper and commodity prices in general,” said Sabrin Chowdhury, head of commodities at BMI.
The industrial metal used as a gauge of economic health is down nearly 15% from January highs.
The discount of LME cash versus the three-month contract hit $54.25 a tonne this week, the biggest since September 2017, indicating healthy short-term supplies. It traded at $49.50 on Friday.
In other metals, LME aluminium slipped 0.2% to $2,280 a tonne, nickel climbed 1.9% to $21,340, zinc gained 0.9% to $2,481, lead jumped 2% to $2,096 and tin advanced 1.5% to $25,385.
Comments
Comments are closed for this article.