LONDON: Copper prices on Thursday added to gains from the previous session as investors bet that slower US interest rate hikes and an easing of China’s COVID-19 controls would improve the outlook for demand.

Benchmark copper on the London Metal Exchange (LME) was up 1.1% at $8,326 a tonne at 1707 GMT after leaping 2.5% on Wednesday when US Federal Reserve Chair Jerome Powell said rate increases could slow “as soon as December”.

Higher rates stifle economic activity. The dollar fell to its weakest since June, making dollar-priced metals cheaper for buyers with other currencies.

China, the world’s biggest metals consumer, is set to announce in the coming days a reduction in mass COVID testing and an easing of quarantine protocols, sources told Reuters.

Moves away from its zero-COVID policy come on top of measures by China to support the embattled real estate sector.

Used in construction and power, copper prices fell from a record high of $10,845 in March to as low as $6,955 in July, before rising somewhat as markets began to anticipate economic recovery.

However, data showed that factory output fell in many parts of the world in November.

Copper’s fundamentals remain poor and prices should move towards $7,500 a tonne, said Julius Baer analyst Carsten Menke.

“I don’t think any of the policies coming out of China will have a big impact on property or metals demand,” he said, adding that slowing urbanisation, deteriorating demographics and weaker growth meant China would not drive metals demand as much as in the previous years.

Others were more bullish.

Analysts at Bank of America said that given low stockpiles of metal, a weaker US dollar, a Chinese economic rebound and accelerating use of copper in green technology could push prices to $12,000 next year.