Copper prices in London edged up on Tuesday, driven by a softer U.S. dollar and expectations of an interest rate reduction by the Federal Reserve a day later.
Three-month copper on the London Metal Exchange (LME) rose 0.1% to $9,395 per metric ton by 0406 GMT and nickel edged up 0.2% at $16,310.
LME aluminium eased 0.1% to $2,525, lead dipped 0.2% at $2,035 and tin fell 0.3% to $31,850 a ton, while zinc traded nearly flat at $2,945.
A weak dollar brought by aggressive rate cut hopes underpinned commodities, while copper also benefited from slowing inventory inflows and tight mine supply, said Sandeep Daga, a director at Metal Intelligence Centre.
The dollar traded near its one-year low on Tuesday, a day ahead of the expected start of an U.S. easing cycle that markets are betting may begin with an outsized rate cut.
A weaker dollar makes greenback-priced metals cheaper to holders of other currencies.
Copper inventories in SHFE warehouses fell to 185,520 tons on Friday, the lowest since Feb. 23.
Aluminium rallies on technical support, weaker dollar
The fall in inventory points to a continued pick-up in pent-up demand after LME copper price surged to a record level above $11,000 a ton and amid growing tightness in scrap supply in China, said Benchmark Mineral Intelligence analysts in a note.
The premium to import copper into top consumer China was at $63 a ton on Friday, compared to a discount of $20 a ton in May.
“However, … exiting bears… are lifting prices while bulls are looking on. Open interest has been falling. This tells me that despite the latest rally, prices are likely to be range-bound,” Daga added.
The Chinese markets are closed for a public holiday.
Comments