LONDON: Copper prices pulled back from their highest level in about three weeks on Tuesday after the dollar rebounded and oil prices slipped.

Copper had been building on two sessions of gains as investors bought the metal as a hedge against inflation amid a surge in oil prices to multi-year peaks.

But oil prices receded while the dollar index erased losses and moved into positive territory, making commodities priced in the US unit more expensive for buyers using other currencies.

Three-month copper on the London Metal Exchange (LME) slid 2.5% to $9,270 a tonne by 1620 GMT after hitting $9,632.50, its highest since June 16.

Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen, said LME copper failed to sustain a break above its 21-day moving average, triggering selling by speculators who regard it as a short-term technical trading signal.

Also weighing on copper has been weak data from top metals consumer China while monthly orders for German-made goods in May showed the sharpest slump since last year’s first coronavirus lockdown.

Copper has pulled back from the record peak of $10,747.50 touched in May, partly because of weak copper demand in China.

“Consumers are still standing away and other sectors of the trade are selling into rallies as they cannot see the justification for current price levels at this time of year,” Malcolm Freeman of Kingdom Futures said in note.

A jump in demand for traditional lead-acid car batteries and lingering freight problems have created shortages of lead and driven up prices globally.

Lead was the only LME metal in positive territory, rising 0.3% to $2,294 a tonne.

Traders are awaiting minutes due on Wednesday from the US Federal Reserve’s latest policy meeting, which is expected to provide insight into last month’s hawkish shift.

LME aluminium slipped 1.7% to $2,512.50 a tonne, zinc shed 1% to $2,917, nickel dropped 2.3% to $17,995 and tin was down 0.1% at $31,650.