LONDON: Copper prices retreated on Wednesday on a firmer dollar and as investors locked in profits from a recent rally ahead of the U.S. Thanksgiving holiday.
Three-month copper on the London Metal Exchange was down 0.5% at $8,405 per metric ton at 1045 GMT, after hitting the highest level in more than two months on Tuesday.
At the peak on Tuesday, LME copper had rebounded 8% since touching an 11-month low of $7,856 on Oct. 23.
“With Thanksgiving coming up, it could mean you are more inclined to book profits than going for an extension higher, so that makes me a bit cautious,” said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.
LME copper failed on Tuesday to break above resistance at the 200-day moving average and a downtrend from the January high.
“We are toying with some pretty critical levels. If we can close above that band of resistance, then the market is likely to look ahead to $8,600 next,” Hansen added.
Copper hits 2-month high as yuan jumps against dollar
The most-traded December copper contract on the Shanghai Futures Exchange ended day-time trade 0.3% lower tat 68,090 yuan ($9,442) per ton.
Also weighing on the market was a firmer dollar index , which rebounded from a 2-1/2 month low as the minutes from the Federal Reserve’s last meeting hinted that interest rates would likely remain restrictive for some time.
A stronger dollar makes it more expensive for non-dollar holders to buy the greenback-priced commodity.
Despite macroeconomic headwinds, analysts at Minmetal Futures said copper prices would likely remain on an upward trajectory amid low inventories and supply disruptions, including First Quantum Minerals’ Panama mine issues.
Limited supply and healthy demand in top metal consumer China underpinned imports, reflected by a recent rally in the Yangshan copper premium, which hit a one-year high this week.
LME zinc lost 1.5% to $2,507 a ton after more big arrivals of the metal into LME warehouses, meaning the total has more than tripled in about a week to the highest levels in more than two years.
LME aluminium fell 0.9% to $2,239 a ton, nickel dropped 1% to $16,820, lead eased 0.6% to $2,257.50 and tin shed 0.7% to $24,805.
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