LONDON: Copper prices rose on Tuesday to a 22-day high on a softer dollar as traders balanced their positions ahead of the outcome of the U.S. presidential election and on stimulus cues from top metals buyer China.
Three-month copper on the London Metal Exchange (LME) was up 0.6% to $9,753.5 per metric ton by 1041 GMT. It touched $9,773 earlier for the highest since Oct 14.
Volumes are relatively thin for the base metals complex as investors brace for volatility in the coming few sessions until a clear winner is declared at the U.S. election, a trader said.
The U.S. currency weakened this week, after a weekend opinion poll showed Democrat Kamala Harris with a surprise lead in Iowa, a traditional Republican stronghold.
Dollar traders had priced in victory for Republican Donald Trump whose tariff and immigration policies analysts say are more inflationary. Last week the dollar index surged to a three-month high at 104.63.
Weaker dollar propels copper to two-week peak
A weaker dollar makes the greenback-priced metals cheaper for holders of foreign currencies, and typically provides support to metal prices.
But the market remained cautious over a potential second term for Trump, who could reintroduce tariffs that could dampen global base metals trading activity like in 2019.
Back then, the Sino-U.S. trade war caused major diversion of copper and aluminium scrap shipment, disrupting trade flow of secondary material.
China is more prepared for the headwinds this time.
According to Reuters, China is considering approving an extra stimulus package to save the economy if Trump wins.
This week’s meeting of China’s National People’s Congress standing committee will shed more light on the stimulus measures.
For other metals, zinc rose 1.6% to $3,083 a ton after a new ruling to suspend Youngpoong’s Seokpo zinc smelter, the world’s sixth largest, due to improper waste water discharge.
Aluminium also gained 1.1% to 2,650.5. Chinese social inventory dropped to an eight-month low of 585,000 tons, according to SMM.
Nickel climbed 1.7% to $16,275, lead increased 0.5% to $2,043,5 and tin rose 0.3% to $32,255.
Source: Brecorder
