LONDON: Copper prices hit two-week highs on Tuesday after US President Donald Trump’s announcement he would remove Federal Reserve Governor Lisa Cook boosted expectations of US interest rate cuts next month and weakened the dollar.
A weaker US currency makes dollar-priced metals cheaper for holders of other currencies and drives demand and prices. However, traders said the copper price had retreated since the initial knee-jerk reaction due to a steadier dollar and selling by Chinese companies. Trump said in a letter he was firing Cook over alleged improprieties in obtaining mortgage loans.
Analysts say that has reinforced investor concern about the independence of the US central bank. Benchmark copper on the London Metal Exchange traded flat at USD9,796 a metric ton in official rings from an earlier USD9,862, the highest since August 13.
Copper drew support from disruption to supply in Chile, where the mining regulator Sernageomin has imposed additional requirements on Codelco for resuming operations in areas affected by a deadly collapse at its El Teniente copper mine.
Codelco, the world’s largest copper producer, has cut its copper forecast for the year as a result of the incident. On the technical front, initial support for copper is at the 50-day moving average at USD9,754 followed by the 21-day moving average at USD 9,731.
Elsewhere, traders expect zinc prices to be supported by sliding inventories in LME-approved warehouses, which at 65,525 have dropped 66 percent since the middle of April. Cancelled warrants, or metal earmarked for delivery, indicate another 23,725 tons are due to leave the LME system.
Worries about supplies on the LME market have narrowed the discount for the cash zinc contract over the three-month forward to around USD4 a ton from levels above USD40 in April.
Three-month zinc was down 0.8 percent at USD2,795.5 a ton, aluminium fell 0.7 percent to USD2,607, lead was little changed at USD1,994.5, tin rose 0.3 percent to USD33,925 and nickel gained 0.3 percent to USD15,140.
Metals markets are waiting for clues on demand prospects in the world’s biggest consumer of industrial metals, China, from surveys of purchasing managers in its manufacturing industry.
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