LONDON: Copper prices extended gains on Wednesday after the head of the US central bank vowed to keep interest rates low to boost economic recovery and data showed strong factory activity.

Three-month copper on the London Metal Exchange (LME) had gained 2% to $9,489 a tonne by 1600 GMT. It had dropped 8.6% last week, its biggest weekly fall since March 2020, on fears US monetary policy would soon tighten.

Comex copper climbed 2.4% to $4.33 a lb.

“After the dramatic falls of last week, this could be a good entry level if you’re an investor or a consumer,” said independent consultant Robin Bhar.

“I suspect for the next few months we’ll consolidate sideways. Maybe that will be the mantra of summer - buy the dips, sell the rallies and then reassess how things are evolving going forward.”

Bhar said it was positive that prices last week held above $9,000, a technical level marking a long-term uptrend, but a break below that could send prices tumbling by another $1,000.

A measure of US factory activity climbed to a record high in June, data showed on Wednesday, a day after US Federal Reserve Chair Jerome Powell assured markets that interest rates would not be raised too quickly based only on the fear of coming inflation.

The pricing department of China’s National Development and Reform Commission and the country’s market regulator have sent teams to various Chinese provinces and cities to investigate bulk commodity prices and supplies.

The price of LME cash nickel moved to parity with the three month contract for the first time since November 2019 after being at a discount, indicating a tightening in LME supplies.

LME aluminium rose 0.4% to $2,435 a tonne, zinc gained 1% to $2,890, nickel rose 1.8% to $18,065, lead advanced 0.8% to $2,191.50 and tin added 0.1% to $30,425.