LONDON: London copper has fallen, pressured by a stronger US dollar after hawkish comments from US Federal Reserve officials and as investors locked in recent gains. Trading volumes in most metals were lighter than usual, as investors held off taking positions ahead of Easter and opting for caution following Tuesday’s bombs in Belgium.
A stronger US dollar, following comments supporting more US interest rate rises from the heads of the Philadelphia and Chicago Federal Reserves, weighed on metals markets as it makes commodities priced in the currency more costly for buyers outside the United States.
London Metal Exchange three-month copper ended down 2.3 per cent at $US4,949 a tonne in official rings. Traders and analysts said uncertainty over the size and timing of any US rate rises prompted some investors to take profits.
“We’re starting to see the sugar high from the weak dollar fading, and its starting to weigh across the commodity complex, hitting copper particularly hard,” said Dane Davis, metals analyst at Barclays Capital. Prices of the metal used in power and construction reached a four-and-a-half-month top of $US5,131 a tonne on Friday on upbeat Chinese housing data and a more dovish Federal Reserve policy outlook.
“There are positive signs in the data but I’d be reluctant to feel too confident about demand,” said Caroline Bain, senior commodities economist at Capital Economics. The first week in April should give the market some direction as China’s manufacturing purchasing managers index is released and the copper industry meets in Santiago, Chile for an event arranged by the Center for Copper and Mining Studies (CESCO).
