LONDON: Copper prices were steady on Thursday as investors’ balanced optimism over potential US interest rate cuts with concern about high inventories and lacklustre demand in China.

Three-month copper on the London Metal Exchange (LME) was little changed at $9,870 a metric ton in official open-outcry trading. The price had jumped 2% in the previous session for its biggest daily gain since June 6, but LME copper has eased 11% since its record high of $11,104.50 on May 20.

“It looks like the focus is once again turning to the potential for US interest rates being cut,” said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.

Global equities clocked up more record highs after US data narrowed the odds on the Federal Reserve cutting interest rates in September and sent the dollar index lower.

A weaker US currency makes dollar-priced commodities less expensive for buyers using other currencies. A renewed rally, however, not only requires lower interest rates, but also a pick-up in demand and shrinking inventories, Hansen said, adding that the market has adopted a wait-and-see approach.

Any move close to the psychological $10,000 level would be likely to spark profit-taking until fundamentals improve, he added. LME copper inventories have surged 80% since mid-May to 186,275 tons.

Stockpiles in Shanghai Futures Exchange warehouses have eased slightly in recent weeks but are still 10 times the level at the start of the year. The only LME metal in positive territory was zinc, which gained 0.5% in official activity to $3,005.50 a ton.

The metal mainly used for galvanising steel was being supported by gains in the ferrous market, where iron ore hit a one-month high. “Most crucially, zinc is also benefiting from a feed shortage and the rising cost of production,” said Al Munro at broker Marex.

In other metals, LME aluminium dipped 0.3% to $2,540 a ton, nickel eased by 0.7% to $17,200, lead was down 0.3% at $2,215.50 and tin shed 0.5% to $33,200.