BEIJING: Copper fell on Monday from near six-month highs, as the US dollar firmed ahead of rate decisions by central banks later this week, with fears of a global recession and bleak metals demand weighing on prices further.
Three-month copper on the London Metal Exchange slid 1.6% to $8,408.5 a tonne by 0403 GMT, while the most-traded January copper contract on the Shanghai Futures Exchange was down 1.3% at 65,940 yuan ($9,445.64) a tonne.
The dollar firmed after data showed producer prices in the United States rose more than expected last month, pointing to persistent inflationary pressures and stoking fears that the Federal Reserve would need to keep rates higher for longer.
Investors are bracing for a 50 basis points rate hike from the Fed this week, a step down from its recent series of three-quarter-point increases.
Meanwhile, the European Central Bank and the Bank of England are also set to announce interest rate hikes during the week.
A stronger dollar makes the greenback-priced metal more expensive for other currency holders.
CITIC Futures said in a report that with high inflation likely to last, global central banks will stick with tight monetary policies that will slow down global economic growth and subdue copper demand, against rising supply in the market.
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It forecast LME copper prices to register a decline next year, with an average of $7,700 a tonne and rangebound between $6,900 and 8,500 a tonne.
Copper prices touched their highest since June on Friday, as investors expected China’s easing of its COVID-19 restrictions to boost global economic growth and metals demand.
Among other metals, LME aluminium lost 1.6% to $2,440 a tonne, zinc slipped 1.2% to $3,203, lead was down 1.5% at $2,166 and tin dropped 3.4% to $23,455.
SHFE aluminium fell 2.6% to 18,725 yuan a tonne, zinc dipped 0.5% to 24,730 yuan, nickel was down 1.4% at 217,420 yuan, and tin shed 4.2% at 189,300 yuan.