LONDON: Copper prices rose on Tuesday as the dollar weakened and funds cut bets on lower prices after top consumer China moved to boost its struggling housing and stock markets.
Benchmark copper on the London Metal Exchange (LME) was up 1.2% at $8,453 a metric ton by 1611 GMT.
Copper extended gains in the European afternoon after the dollar index reversed lower after data showing US job openings fell in July.
A weaker US currency makes dollar-priced commodities cheaper for holders of other currencies, which could boost demand, while a stronger dollar could dent demand. That relationship is used by funds to generate buy and sell signals from numerical trading models.
Earlier, copper gained support from China halving stamp duty on stock trading while the country’s stock exchanges have cut margin requirements.
China’s central bank, meanwhile, announced guidance on relaxing residential housing loan rules in an effort to boost loan applications and house purchases.
“These measures are supporting risk appetite,” said Alastair Munro, base metals strategist at Marex, pointing to cuts to short copper positions by commodity trading advisors (CTAs).
“Data risks come from China’s PMI and US non-farm payrolls,” Munro added.
Industrial metals markets are awaiting surveys of purchasing managers (PMIs) in China’s manufacturing sector, a major driver of industrial metals demand, on Thursday and Friday. Expectations are for a fifth month of contraction. In the United States, gross domestic product (GDP), inflation and non-farm payrolls data due later in the week is likely to yield clues to US interest rates and dollar direction.
On the technical front, copper faces strong upside resistance at the 100-day moving average around $8,457.
Elsewhere, zinc prices climbed to a two-week high of $2,448 a ton on hopes for stronger demand from China’s construction sector as it enters a seasonally strong period.
Prices of the metal used to galvanise steel were last up 2.6% at $2,444 a ton.
Traders said that a rise in cancelled zinc warrants – metal earmarked for delivery – at nearly 20% compared with 2% last week was also supporting zinc prices.
In other metals, aluminium gained 1% to $2,172 and lead advanced 1.3% to $2,190 while tin dipped 0.3% to $25,420 and nickel was down 0.5% at $20,685.