LONDON: Copper prices rebounded on Friday after two days of losses, helped by US data showing cooling inflation and investors cancelling some bearish positions ahead of the weekend.
Three-month copper on the London Metal Exchange rose 1.1% to $8,663 per metric ton by 1615 GMT and the contract was up 2.5% on a weekly basis.
“I suspect we’re getting some end-of-week covering coming through. We’ve been getting short-covering rallies within an overall bear trend,” said independent consultant Robin Bhar.
Data on Friday showed US annual inflation logged its smallest increase in more than two years in June, raising hopes that the Federal Reserve is close to ending its interest rate hiking cycle.
The dollar index softened after the data, making dollar-priced metals less expensive to holders of other currencies.
“The Fed may not be ready to cut rates, but they also may not be ready to carry on tightening, so we could be looking at peak Fed rates and that is quite positive for metals,” Bhar said.
Pledges from the Chinese authorities to boost the country’s troubled property sector have also been fuelling bullish sentiment.
But Bhar said the Chinese government is likely to offer only limited help, aiming to stabilise the property sector and not over-stimulate it.
“The government wants to de-leverage and clean up the economy, so I’m not hopeful that the property sector will get enough support to see the metals rally in coming weeks,” he said, adding the sector probably accounts for 30-40% of Chinese metals demand.
Russian aluminium producer Rusal said it and the Nigerian government are discussing a possible restart of the Alscon smelter in Nigeria. LME aluminium gained 0.9% to $2,225 per metric ton.
Among other metals, zinc advanced 2% to $2,504 a metric ton, lead was little changed at $2,158.50, nickel climbed 2.7% to $22,280 and tin rose 0.2% to $28,740.