Copper fell on Wednesday in cautious trade ahead of the outcome of a Federal Reserve policy meeting, which is expected to leave interest rates on hold but signal how quickly the bank may tighten this year. Benchmark copper on the London Metal Exchange closed down 0.2 percent at $4,935 a tonne in official trade, having moved in a tight range of around 50 cents.
The metal used in power and construction has risen 8 percent in the past month but may retest the $4,800 support level unless evidence emerges of physical buying in China.
"As we go into the second quarter we should get some physical buying picking up, maybe some restocking," said Robin Bhar, head of metals research at Societe Generale. "But we'd need to see a turnaround in inventories to really put a solid floor under prices."
Sergey Raevskiy at investment bank SP Angel said data on China's investment in the power grid will provide direction. "If the amount of money the government is putting into grid infrastructure is down on last year, it will be very bearish for copper," he said.
Investors are positioned for guidance from the Federal Reserve on when interest rates are likely to rise.
"We suspect that a resumption of the Fed's 'rate hike agenda' should lead to further dollar strengthening and nudge commodities a little lower over the short-term," Edward Meir, analyst at broker INTL FCStone, said in a note.
Three-month aluminium closed down 0.7 percent at $1,509 in official trading, testing key support at $1,510, analysts said.
Lead ended down 0.4 percent at $1,779 a tonne, while tin fell 0.9 percent to $16,705 a tonne, Zinc and nickel were the only gainers among the metals, up 0.3 percent at $1,748 a tonne and 0.4 percent at $8,590, respectively.