LONDON: Copper prices rose on Wednesday after touching a two-year peak a day earlier as investors bet on further economic recovery and also sought protection from potential inflation in commodities.
"The extended V-shaped recovery is certainly continuing in copper. The market is focusing on the manufacturing data, both in the US and China, which are showing improvement and that's an area where copper will thrive," said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.
Copper is often regarded as a bellwether of the global economy due to its extensive industrial uses.
"In addition to that, following the Fed meeting last week, the market is also increasingly looking to some of these commodities as potential inflationary hedges so that's also attracting demand for copper from a macro-economic perspective," Hansen added.
Three-month copper on the London Metal Exchange had added 0.4% to $6,711 a tonne by 0950 GMT after rising to its highest since June 2018 on Tuesday.
During Asian trading hours, copper dipped as speculators locked in profits and as the dollar firmed.
"Today is all about liquidation and profit-taking," said a Singapore-based metals trader.
The dollar extended gains after solid US manufacturing data, making greenback-traded metals more expensive for buyers using other currencies.
Peru's vice minister of energy and mines said that mining had almost completely recovered from the impact of the COVID-19 pandemic.
Fitch Solutions raised its 2020 average price forecast for LME three-month nickel to $13,500 a tonne from $13,250.
"Prices will be supported over the remainder of 2020 as demand for nickel continues to find support from Chinese government stimulus to domestic industries and a recovery in economic activity in other countries," it said in a note.
LME nickel was set for an eighth straight session of gains, rising 0.8% to $15,655 a tonne
LME aluminium gained 0.2% to $1,820 a tonne, zinc advanced 0.5% to $2,564.50, lead added 0.3% to $1,977 while tin dipped 0.2% to $18,150.