Copper futures edged lower on Friday due to a stronger dollar, yet the London Metal Exchange (LME) contract was poised for its first weekly gain in five weeks, driven by enhanced physical demand following a recent price decline to a two-month low.
As of 0626 GMT, three-month copper on the LME (CMCU3) fell by 0.6% to $9,799.50 per metric ton. Despite this, the contract has seen a 0.6% increase over the week.
The U.S. dollar reached a fresh eight-week high above 159 yen and remained close to a five-week peak against the sterling. This strength in the dollar is attributed to the Federal Reserve’s cautious approach to interest rate cuts, in contrast to more dovish policies from other central banks.
“Base metals prices … continued to face pressure as the Fed remained on hold in June for a seventh straight meeting… A later Fed cut could limit the upside for base metal prices across the board in 2024,” noted BMI analysts.
A stronger dollar typically makes dollar-priced metals more costly for holders of other currencies.
Earlier this week, LME copper prices dropped to $9,551 per ton, the lowest in two months, as consistently high stockpiles sparked concerns over weak demand for the metal. However, this price drop led to increased physical purchases, providing support in the $9,500-$9,600 per ton range, according to brokers.
In China, the most-traded July copper contract on the Shanghai Futures Exchange (SCFcv1) remained nearly unchanged at 79,470 yuan ($10,944.77) per ton.
Other base metals on the LME also saw declines: aluminium (CMAL3) eased by 0.3% to $2,515 per ton, nickel (CMNI3) fell by 0.6% to $17,325, zinc (CMZN3) declined by 0.4% to $2,862.50, lead (CMPB3) shed 0.7% to $2,202, and tin (CMSN3) dropped by 1% to $32,755.
On the Shanghai Futures Exchange, aluminium (SAFcv1) dipped by 0.2% to 20,500 yuan per ton, nickel (SNIcv1) decreased by 0.6% to 134,360 yuan, lead (SPBcv1) fell by 1.6% to 18,740 yuan, while zinc (SZNcv1) rose by 0.2% to 23,845 yuan, and tin (SSNcv1) increased by 0.4% to 272,240 yuan.
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