LONDON: Copper prices pared early gains on Tuesday as the dollar strengthened after US inflation data reinforced bets that the Federal Reserve would keep interest rates unchanged in March.
Three-month copper on the London Metal Exchange (LME) was up 0.4% at $8,266.5 a metric ton by 1351 GMT.
The metal hit a three-month low of $8,127 on Feb. 9 and fell 3.7% last week. The dollar index was up 0.6% after the inflation data. High US interest rates support the dollar, which makes dollar-priced metals more expensive for buyers with other currencies.
“We believe the short-term outlook remains bearish to neutral for copper demand and do not foresee a substantial recovery in prices before the second quarter, which should mark the starting point for Fed rate cuts,” said ING commodities strategist Ewa Manthey.
Copper, widely used in power and construction, is down 4% this month on concerns about demand from top consumer China and its property sector in particular.
On the technical front, the metal is facing resistance from its 100-day and 200-day moving averages at $8,294.7 and $8,339 respectively. LME daily data showed that copper stocks in LME-registered warehouses hit the lowest level since September after 850 tons of outflows. Meanwhile, lead stocks rose further to a six-year high while zinc stocks climbed to their highest in two and a half years.
LME aluminium slipped 0.3% to $2,220.5 a ton, zinc fell 0.8% to $ 2,300.5, lead lost 1.3% to $1,998, tin was up 0.1% at $27,330 and nickel gained 0.4% to $16,110.
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