Copper slipped on Tuesday as investors locked in gains after Monday’s rally towards a record high, with their focus now on a Federal Reserve rate decision and a meeting between U.S. President Donald Trump and Chinese counterpart Xi Jinping.
Benchmark three-month copper on the London Metal Exchange was down 1.1% to $10,910.50 per metric ton at 1015 GMT. The metal touched $11,094 on Monday, just short of its all-time peak of $11,104.50, driven by hopes that Trump and Xi could secure a deal to ease U.S.-China trade tensions on Thursday.
Investors were booking profits after copper’s ascent, traders said.
WEAKER DOLLAR PROVIDES SUPPORT
“There seems to be a lot of disappointment among the bulls. It just keeps hitting a ceiling,” Panmure Liberum analyst Tom Price said of copper, noting how the open arbitrage to ship metal to the U.S. continued to inflate Comex inventories.
“No one’s concerned about short-term supply,” Price said. The cash LME copper contract had a near-$24 a ton discount to the three-month forward suggesting little need for immediate delivery of metal.
In China, the Yangshan copper premium which reflects appetite for importing copper, stood at $35 a ton, down from $58 in late September.
Brokerages expect the Fed to trim its short-term borrowing rate by 25 basis points at its meeting ending on Wednesday, while Chair Jerome Powell’s speech after the decision could signal whether an additional cut will emerge in December.
Besides the Fed and the Trump-Xi meeting, the U.S. government shutdown is dragging on the dollar Price said. A weaker dollar makes dollar-denominated metals more affordable for holders of other currencies.
“So there are three drivers that should take copper above the record again,” Price said. “Even though I’m a bear on the longer-term outlook for copper, I think this might be a fairly buoyant few days.”
Aluminium fell 0.6% to $2,856 a ton, zinc dropped 1.1% to $3,020.50, nickel shed 0.7% to $15,165, tin dipped 0.2% to $35,820 and lead lost 0.4% to $2,016.