LONDON: Copper prices rose to a three-month high on Friday, on track for the third week of consecutive growth, due to better-than-expected data from top consumer China, tighter supply, a decline of exchange inventories and a softer dollar.
Three-month copper on the London Metal Exchange rose 0.9% to $8,543.5 per metric ton by 1059 GMT after touching $8,564, its highest since Sept. 1, and breaking through the resistance coming from the 200-day moving average at $8,445.
The private Caixin survey showed that China’s factory activity unexpectedly expanded in November amid rising orders, even though the official November purchasing managers’ index (PMI) registered a fall.
“Although the official PMI data points to Chinese industry still contracting, the Caixin data at above 50 indicates that the stimulus that the Chinese government have been offering is working,” Nitesh Shah at WisdomTree said.
Providing further support to copper and other dollar-priced metals, the US currency dipped as traders weighed data showing inflation was easing and looked ahead to a talk later in the day by US Federal Reserve Chair Jerome Powell.
Softer inflation data in both the United States and the eurozone reinforced expectations that both central banks might be done raising interest rates and led traders to bet on earlier cuts next year.
Copper ticks lower on firm dollar, nickel extends gains
“Looking forward to 2024, copper prices will be supported amid weaker US dollar on the back of US Fed monetary policy easing,” said ING commodities strategist Ewa Manthey.
Concerns about tighter supply from Panama and signs of reduced availability of copper concentrate have been other factors behind the metal’s growth.
Copper inventories in warehouses monitored by the Shanghai Futures Exchange fell 27% this week, while daily on-warrant stocks in the LME-registered warehouses eased to the lowest since September after fresh cancellations of warrants.
Among other LME metals, aluminium eased 0.2% to $2,188 a ton, zinc rose 0.2% to $2,479.5, lead increased 0.6% to $2,136, tin climbed 1.6% to $23,615 while nickel added 0.9% to $16,795.
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