LONDON: Copper prices rebounded on Monday as traders cancelled short positions in frustration, but gains were capped by uncertainty about economic growth and high interest rates.
Three-month copper on the London Metal Exchange was up 1% at $8,115 per metric ton by 1105 GMT, having shed 1.4% and hit a two-week low on Friday.
“Traders have been playing it from the short side recently and they’re getting a little frustrated as it has not really been yielding much so we’ve been seeing some short-covering,” said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.
LME copper prices lost steam after hitting a one-month peak of $8,260 a ton last week.
“It’s a market that’s range-bound and where there’s not any aggressive appetite for short-selling, given the fact that buyers already started to emerge ahead of the $8,000 level,” Hansen added.
China demand concerns, stronger dollar weigh on copper and other base metals
On the Shanghai Futures Exchange, the most-traded December copper contract was unchanged at 67,210 yuan ($9,211.14) a ton.
Weak economic data last week from China raised concerns over the demand outlook.
Investors will closely monitor a slew of China economic data scheduled to be released this week, including industrial output, urban investment and retail sales for October.
“There’s persisting concerns of weakness in China and Europe and we’re starting to see tentative signs of growth pulse in the United States starting to slow,” said Kyle Rodda, a financial market analyst at Capital.com.
More stimulus measures from China are still required to spark a meaningful turnaround to copper prices and broader base metals in the short- and medium-term, Rodda added.
Traders were also awaiting U.S. inflation data that is expected to offer further clues on the Federal Reserve’s rate outlook after hawkish remarks from Chair Jerome Powell last week.
Higher interest rates usually tame economic growth, which in turn weighs on demand for metals.
LME aluminium added 0.2% to $2,219 a ton and tin gained 1.4% to $24,955 while nickel shed 1% to $17,080, zinc dropped 0.7% to $2,543 and lead dipped 0.1% to $2,177.
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