LONDON: Prices of copper, often used as a gauge of global economic health, fell in London on Friday as the dollar headed for its best week against major peers in almost five months on bets of an earlier-than-expected US interest rate hike. A stronger dollar makes greenback-priced metals more expensive to holders of other currencies.
After a surprisingly strong reading on US inflation in October, investors anticipate the Federal Reserve to raise interest rates sooner than planned, which could trim liquidity in financial markets and slow recovery in the world's biggest economy.
Three-month copper on the London Metal Exchange was down 0.2% at $9,614 a tonne, as of 0701 GMT, while the most-traded December copper contract on the Shanghai Futures Exchange closed up 0.5% at 70,570 yuan ($11,038.29) a tonne. Losses were cushioned by tight inventories in exchange warehouses. On a weekly basis, Shanghai copper rose 1.8% and the LME contract was also set to notch gains.
With rate-hike expectations happening alongside the passage of a trillion-dollar US infrastructure bill and tight copper scrap supply, investors should exercise a wait-and-see approach for copper, GF Futures said in a note.
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