Copper Prices Surge as Dollar Drops on Fed Rate Cut Expectations
LONDON: Copper prices soared on Wednesday as the dollar tumbled following the release of lower-than-expected US inflation data, fueling speculation that the Federal Reserve may cut interest rates soon. Benchmark copper on the London Metal Exchange (LME) spiked 2.3% to $9,981 a ton after the inflation figures were announced.
The red metal had recently hit a seven-week low of $9,680 a ton, dropping 11% from its all-time high in May. Traders anticipate a dovish statement from the Fed after its policy meeting, alongside a weaker US dollar, leading to increased buying of industrial metals.
Dan Smith, head of research at Amalgamated Metal Trading, commented on the subdued copper demand, particularly in wire rod plants. Despite high inventory levels, copper prices have been boosted by algorithmic traders in recent days.
In addition to copper, tin experienced a substantial 4% jump to $33,200, following a brief decline to a one-month low. With a 32% increase in value this year, tin’s stocks are also decreasing, contributing to the rise in prices.
Other metals also saw gains, with aluminium up 0.7% at $2,552, zinc rising 3% to $2,857.5, lead ticking up 0.8% to $2,173, and nickel increasing by 1.2% to $18,025.
Overall, the combination of Fed rate cut expectations and a weakened dollar has led to a surge in metal prices, prompting traders to closely monitor the market for future trends.
