LONDON: Copper climbed to six-week highs on Thursday as a softer dollar and lower inventories triggered a flurry of buying that took prices through a key technical level, however concern about demand in top consumer China capped gains.
Benchmark copper on the London Metal Exchange (LME) was up 0.6% at $8,315 a metric ton by 1013 GMT. Prices of the metal, used in power and construction, earlier touched $8,320, the highest since October 2.
Copper stocks in LME registered warehouses have been rising, but latest data from the exchange shows a drop of 2,300 tons to 181,950 tons.
“A knee-jerk reaction to the stocks and the dollar started it and the technical break created momentum,” a copper trader said, adding that low volumes had exaggerated the move. “Focus still on China demand outlook, which doesn’t look healthy.”
A weaker U.S currency makes dollar-priced commodities cheaper for holders of other currencies, which could boost demand.
China industrial output data helps copper to 6-week high
Copper broke through resistance at the 100-day moving average at $2,285. Traders said the next upside barrier was $8,377, the high on September 29.
However, worries about demand in China, which accounts for nearly half of global copper consumption, were reinforced by new home prices which fell for the fourth month in October.
Elsewhere, zinc prices came under pressure after stocks in LME warehouses nearly doubled to 133,200 tonnes after months of declines, which on Wednesday helped push prices of the galvanising material to a six-week high at $2,667.5.
Zinc was down 2.6% at $2,587 a ton.
In other metals, aluminium slipped 0.3% to $2,224 a ton, lead gained 1.1% to $2,271, tin retreated 0.3% to $25,260 and nickel fell 0.8% to $17,280.
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