LONDON: Copper prices held near one-month highs on Monday, supported by a weaker dollar and hopes that the Federal Reserve will cut interest rates at a faster pace after US data suggested that underlying price pressures could be easing. Traders said volumes were subdued because of a US holiday and Donald Trump’s inauguration for his second term as US president and uncertainty over his threats to impose tariffs on US imports.
Benchmark copper on the London Metal Exchange (LME) traded 0.4% down at $9,157 a metric ton in official rings. It touched $9,290 a ton on Friday for its highest since Dec. 11. “US inflation expectations have changed. There is market adjustment around the rate cut profile. Metal markets have just mechanically responded to that,” said Panmure Liberum analyst Tom Price.
“Trump is not an important factor, yet. If he starts going big on tariffs, like he did in 2018, people will want inflation protection. Gold and copper are favourite inflation plays.” Lower US interest rates typically mean pressure on the US currency, which could make dollar-priced metals cheaper for holders of other currencies.
A Reuters survey last week showed a slim majority of economists expect the Fed to keep interest rates steady on Jan. 29 and resume cutting in March. Supporting industrial metals overall was fourth-quarter GDP growth of 5.4% in top consumer China, beating analyst expectations.
China’s policymakers have unveiled a series of stimulus measures since September last year in an effort to revive growth and have pledged to do more this year to counter any US tariffs on Chinese goods.
The Yangshan premium, meanwhile, suggests stronger Chinese demand. At $76 a ton, this gauge of China’s appetite for importing copper has gained 76% since early November. In other metals, aluminium lost 0.1% to $2,682 a ton, zinc slipped 0.3% to $2,932, lead rose 0.7% to $1,980, tin was down 0.5% at $29,625 and nickel retreated 1.5% to $15,850.
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