LONDON/BEIJING: Copper prices slipped on Wednesday to their lowest in nearly two weeks as funds sold, while consumers and producers were sidelined ahead of a speech by U.S. Federal Reserve Chair Jerome Powell later this week, metal traders said.
Commodity and financial markets will be looking for clues in Powell’s speech on Friday as to whether U.S. interest rates will be cut by 25 basis points as expected at the Fed’s September 16-17 meeting, which could undermine the dollar.
A lower U.S. currency could help boost demand for dollar-priced metals. This relationship is used by funds which trade, often on a day-to-day basis, using buy and sell signals from numerical models.
Benchmark copper on the London Metal Exchange was down 0.1% at $9,676 a metric ton at 1023 GMT, after earlier hitting $9,673.50, its lowest since August 7.
“Systematic flows are dominating our space amid lack of wider involvement,” said Alastair Munro, senior base metals strategist at Marex.
“Markets are struggling to move meaningfully in either direction as the outlook remains unclear.”
Stronger dollar weighs on copper ahead of crucial geopolitical events
Further out worries about demand, particularly in top consumer China, have pushed the discount for the cash copper contract over the three-month forward towards $100 a ton, the highest since February.
Also suggesting sluggish demand is the Yangshan copper premium, a gauge of China’s appetite for importing copper, at $47 a ton from levels above $100 a ton in May.
On the technical front, upside resistance is around $9,475 a ton, where the 21- and 50-day moving averages are converging.
Traders said funds had also been selling aluminium, which briefly broke below the 200-day moving average, currently at $2,565 a ton.
Three-month aluminium earlier touched a two-week low at $2,558 a ton. It was last at up 0.2% at $2,569.
In other metals, zinc gained 0.2% to $2,773, lead slipped 0.3% to $1,967, tin retreated 0.2% to $33,780, and nickel fell 0.5% to $14,935 a ton.
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