LONDON: Copper prices edged lower on Thursday as traders booked profits following Wednesday’s rate cut by the US Federal Reserve, while the dollar firmed slightly after Fed Chair Jerome Powell ruled out more aggressive easing going forward.
Benchmark three-month copper on the London Metal Exchange was down 0.3percent at USD9,967 a ton in official open-outcry trading, after touching a one-week low of USD9,925 on Wednesday. Following the rate cut, the US Central Bank also indicated that more cuts would follow in October and December, but Powell pushed back in his press conference against the idea that those could be larger cuts.
The dollar index firmed by 0.2 percent to 97.04 but is still down around 10.6percent this year.
A stronger dollar makes dollar-denominated metals more expensive for holders of other currencies and can weigh on prices. Dan Smith, managing director at Commodity Market Analytics, said the rate decision on Wednesday was one of the key drivers behind copper’s dip but also pointed to a technical chart pattern known as a “triple top”.
“There has been quite a lot of overhead resistance for copper around the USD10,160 level,” Smith said. “It’s turned at that point three times recently, which means the momentum is likely to be on the downside for the time being.” Among other base metals, aluminium was flat at USD2,683 a ton in official prices, having touched a one-week low of USD2,666.50 earlier in the session. The lightweight metal widely used in transport, packaging and construction hit a six-month high of USD2,720 on Tuesday.
The premium of the cash aluminium contract to the three-month contract had narrowed to USD4 a ton on Thursday, from USD16 a ton on Tuesday. Zinc fell 0.3percent, nickel slipped 0.8percent and tin shed 1.9percent, while lead gained 0.2percent to USD2,015.50 per ton.
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