Onome Amuge
Copper prices eased on Thursday as traders booked profits following the US Federal Reserve’s decision to trim interest rates, while a firmer dollar added pressure on the industrial metal.
Benchmark three-month copper on the London Metal Exchange fell 0.3 per cent to $9,967 a tonne in official open-outcry trading, after touching a one-week low of $9,925 on Wednesday.
The Fed cut rates on Wednesday and signalled further reductions in October and December. However, chair Jay Powell struck a more cautious tone, pushing back against expectations of more aggressive easing.
The dollar index edged 0.2 per cent higher to 97.04 on Thursday, though it remains down more than 10 per cent since the start of the year. A stronger US currency makes dollar-denominated commodities more expensive for holders of other currencies, dampening demand.
Dan Smith, managing director at Commodity Market Analytics, said the Fed’s move was a key driver behind copper’s pullback but pointed to technical market signals as well.
“There has been quite a lot of overhead resistance for copper around the $10,160 level. It’s turned at that point three times recently, which means the momentum is likely to be on the downside for the time being,”he said.
Other base metals were mixed. Aluminium traded flat at $2,683 a tonne, after hitting a one-week low of $2,666.50 earlier in the session. Prices for the lightweight metal, widely used in transport, packaging and construction, reached a six-month high of $2,720 earlier this week.
The premium of the cash aluminium contract over the three-month benchmark narrowed sharply to $4 a tonne on Thursday, from $16 at the start of the week.
Elsewhere, zinc slipped 0.3 per cent, nickel fell 0.8 per cent and tin dropped 1.9 per cent, while lead bucked the trend with a 0.2 per cent gain to $2,015.50 a tonne.
