LONDON: Copper prices edged higher on Thursday, supported by a weaker dollar and increased appetite for risky assets after results from Nvidia reassured markets about the AI boom.
Benchmark three-month copper on the London Metal Exchange gained 0.7 percent to USD9,820 a metric ton by 1425 GMT after slipping 0.8percent in the previous session. LME copper, which has gained 11 percent this year, has been trapped in a range between USD9,500 and USD9,900 after failing to break above the USD10,000 mark in early July.
“Metals in general are in a holding pattern right now, but the main driver today is probably stronger risk appetite following the Nvidia results last night,” said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.
“It just highlights the importance that this whole AI craze currently has on the market and also wider investment appetite.” European stocks and Chinese shares climbed, partly because Nvidia’s strong results quelled broader worries over cooling demand for artificial intelligence.
Also supporting the market was a weaker dollar as traders added to bets that the US Federal Reserve will cut interest rates next month.
A softer US currency makes dollar-priced commodities less expensive for buyers using other currencies.
Weighing on the market, however, were rising inventory levels, especially on the US Comex exchange, which have nearly tripled so far this year. A large amount of copper flowed to the US ahead of the announcement of 50percent copper tariffs last month.
“There’s a big overhang of supply sitting in the US, so I suppose it really depends on whether demand outside the US is strong enough for that to start to shift,” Hansen said. LME copper inventories added another 1,850 tons in data released on Thursday to a three-month high of 157,950 tons.
The most-traded copper contract on the Shanghai Futures Exchange eased 0.5percent to 78,930 yuan (USD11,034.69) a ton.
LME aluminium rose 0.5 percent to USD2,615.50 a ton, zinc gained 0.3 percent to USD2,770.50, lead was up 0.2 percent at USD1,988 while nickel advanced 1.1percent to USD15,295 and tin firmed by 0.7percent to USD34,785.