LONDON: Copper prices rose on Tuesday as expectations of robust demand from top consumer China were reinforced by a lower dollar, but uncertainty about whether a stimulus package would soon be agreed in the United States capped gains.
Benchmark copper on the London Metal Exchange traded up 0.8% at $6,836.5 a tonne in official rings. Prices of the metal, used widely in the power and construction industries, are close to the 27-month high of $6,877.50 a tonne hit last month.
"The dollar turning lower helped copper push higher," a metals trader said. "The data we saw from China on growth and industrial activity is positive for industrial metals."
US House Speaker Nancy Pelosi said she believed stimulus legislation could be pushed through before the US presidential election in November, but she acknowledged an agreement would have to come by Tuesday for that to happen.
"This process is likely not going to drag out much longer and we likely should know the outcome one way or the other by Wednesday at the latest," said ED&F Man Capital Markets analyst Edward Meir. "We think the parties will in fact strike a deal."
CHINA: Chinese gross domestic product growth at 4.9% year on year in the July to September quarter was below the consensus but above the 3.2% in the second quarter.
Industrial output, key for metals demand, rose 6.9% year on year in September from 5.6% in August.
DOLLAR: A lower US currency makes dollar-priced metals cheaper for holders of other currencies, which could boost demand and prices.
This is a relationship used by funds to generate buy and sell signals from numerical models.
EUROPE: Making markets nervous about growth outside China are surging coronavirus infections in Europe, which has ignited concerns about more severe lockdowns.
CHILE: Worries about wider supply disruptions in top producer Chile helped support copper.
OTHER METALS: Aluminium slipped 0.5% to $1,844, zinc gained 0.5% to $2,504.5, lead added 0.5% to $1,768, tin ceded 0.5% to $18,555 and nickel climbed 0.9% to $15,822 a tonne.