LONDON: Copper prices rose to their highest in nearly two weeks on Wednesday, boosted by a weaker dollar amid hopes that inflation is peaking and the pace of central bank rate hikes will slow.
Three-month copper on the London Metal Exchange gained 1.9% by 1100 GMT, to $8,189 a tonne, the highest since Nov. 17.
The dollar index slipped ahead of a speech by the head of the U.S. Federal Reserve later on Wednesday, making commodities priced in the U.S. currency cheaper for buyers using other currencies.
“Fed Chairman (Jerome) Powell will probably reiterate the slower pace of rate hikes, so the dollar can take a break and that’s good news for metals,” said Amelia Xiao Fu, head of commodity market strategy at Bank of China International.
“But any rally is likely to be limited because there’s still macro pressure on commodities and inflation is still very high.”
The metal, used in construction and power, touched a near five-month peak of $8,600 a tonne earlier this month but retreated largely due to fears that rising COVID cases in top consumer China may curb growth and, therefore, metals demand.
Copper moves higher on China demand hopes
The market was still on edge on Wednesday as more protests erupted in China over COVID-19 restrictions with people in Guangzhou clashing with riot police in hazmat suits.
Also capping gains on the day was weak Chinese factory data as the official manufacturing purchasing managers’ index (PMI) came in at the lowest reading in seven months.
“The disappointing PMIs inform us that the incoming reopening process could be slow, painful and bumpy,” said Ting Lu, chief China economist at Nomura.
The most-traded January copper contract on the Shanghai Futures Exchange slipped 0.3% to 64,680 yuan ($9,057.43) a tonne.
Among other metals, LME aluminium climbed 1.9% to $2,426 a tonne, nickel rose 0.5% to $27,000, zinc advanced 1.1% to $2,968, lead added 0.5% to $2,145 and tin gained 0.9% to $23,000.
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