LONDON: Copper prices edged higher on Wednesday on arbitrage buying, a softer dollar and as investors took a breather from bearish bets that have weighed on the market so far this year.
Three-month copper on the London Metal Exchange added 0.2% to $8,388 per metric ton in official open-outcry trading, having earlier touched a low of $8,336.
The most-traded February copper contract on the Shanghai Futures Exchange lost 0.5% to 67,810 yuan ($9,451.00).
“Having fallen for eight out of the last nine sessions, the (LME) market is due for some kind of consolidation,” said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen. LME copper had shed nearly 5% at its low on Tuesday since touching the highest in nearly five months on Dec. 28.
“As we approach the inflation print tomorrow, the dollar has given back some of its strength, so that’s also adding some support,” Hansen added. The dollar index eased ahead of US inflation data on Thursday, which Hansen said is expected to keep hopes alive for US rate cuts later this year.
A weaker dollar makes it cheaper for non-dollar buyers to purchase the greenback-priced commodity. Although end-users in China have slowed down copper consumption in January, a traditionally weak demand period, the premium to buy copper in the spot market remained high amid thin stocks, which could lend some support to futures prices, said analysts at Guotai Jun’an Futures.
China will release its trade data on Friday, which investors are keenly awaiting to gauge prospects for demand in the world’s biggest metals consumer.
LME aluminium dipped 0.2% in official activity to $2,244 a ton and nickel slipped 0.6% to $16,1900, while zinc rose 0.5% to $2,516, lead climbed 1.5% to $2,082 and tin added 0.3% to $24,300.
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