LONDON: Copper prices retreated on Thursday on a potential delay in interest rate cuts ahead of key inflation data next week and the physical market’s pushback after recent rallies.
Three-month copper on the London Metal Exchange (LME) was down 0.4% at $9,864.5 per metric ton by 1102 GMT.
“Interest rates may not be changing maybe until end of the year. And after the technical jump of copper to $10,000 last week, the demand picture is not picking up at that level,” said Sucden’s Robert Montefusco.
United States’ Federal Reserve continued to be cautious on rate adjustments, with an emphasis on getting inflation back to the 2% target.
April consumer prices index (CPI) data is due on May 15.
Interest rates staying high would support the U.S. dollar, which in turn makes greenback-priced metals pricier for holders of other currencies.
Profit-taking sparked by firm dollar weighs on copper
LME copper has gained 17% so far this year and Shanghai’s most traded copper front-month contract has rallied by 14%.
Key consumers including copper wire and cable makers in China that rarely hedge were hesitant to pick up copper at near record prices, leaving copper inventory in warehouses monitored by the Shanghai Futures Exchange (ShFe) at a four-year high.
But Montefusco said copper’s downside is limited with “a strong lining of positions at $9,950 a ton” and that many commodity trading advisor (CTA) funds and traders still held bullish positions.
Two parties are holding over 60% of copper warrants on LME which totalled 89,900 tons on Thursday, exchange data showed.
Some positive signs were also seen in China’s trade data which returned to growth in April after contracting the previous month.
In other metals, aluminium edged down 0.1% to $2,547, tin advanced 0.8% to $32,240 and nickel was down 0.6% at $18,780. LME zinc eased 0.7% to $2,886 per ton while lead dipped 0.3% to $2,223.
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