LONDON: Copper prices ticked higher on Wednesday ahead of a widely expected rate cut by the US Federal Reserve, which investors bet will support metals demand.
Three-month copper on the London Metal Exchange was up 0.6% at $9,425 per metric ton by 1445 GMT after slipping on Tuesday. LME copper has rebounded by 6% since touching a three-week low on Sept. 4, but is still down 15% since hitting a record high in May. “The market is looking for additional support to come from that rate cut announcement and is also focusing on China, for that government to do more to arrest the slide we’re seeing,” said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.
Chinese President Xi Jinping last week urged authorities to strive to achieve annual economic goals, leading to expectations of stimulus measures to bolster a flagging economic recovery. LME copper was hovering just under $9,500, a level that, if broken, would open up the path to challenge $10,000, Hansen added.
“A lack of profit-taking does indicate that there is some underlying belief that what happens next will add some support to the market,” he said. Most of the buying activity was by computer-driven funds, a trader said.
The chances of the Fed kicking off its easing cycle with a super-sized cut of 50 basis points were revived earlier this week after media reports raised the prospect of more aggressive action. A rate cut often helps boost economic growth and demand for metals, along with pressuring the US dollar.
A softer dollar index supported the market, making dollar-priced metals cheaper for buyers using other currencies. LME zinc was the worst performer, falling 0.9% to $2,901 a ton after more inflows of inventories to LME-registered warehouses, which have jumped 10% over two days to 251,850 tons. LME aluminium edged up 0.3% to $2,531 a ton, nickel rose 0.3% to $16,240, lead gained 0.4% to $2,026 while tin dropped 1.1% to $31,505.
Source: Brecorder
