Latest News

Copper prices fall ahead of Fed rate announcement

Copper fell on Wednesday as a result of demand?worries, and a strong dollar in the run-up to the conclusion of the U.S. Federal Reserve meeting.

The benchmark three-month copper price?on London Metal Exchange?dropped 0.28% at $13,647 per metric ton as of 0300 GMT. The Shanghai Futures Exchange's most traded copper contract was down 0.21% at 104 830 yuan per ton ($15,480.83).

Market pricing for a rate hike has increased in the last week. The Fed will conclude its two-day meeting on Wednesday. According to CME's FedWatch, interest rate traders have priced in a 70% probability that rates will remain unchanged.

Daniel Hynes is a senior commodity strategist at ANZ. He said in a note that investors [in 'copper] remained worried about a tighter monetary policies.

By reducing economic activity, high interest rates can affect the demand for commodities that are dependent on growth like copper.

The dollar has also been supported by rate expectations, which makes commodities priced in greenbacks more expensive for buyers who use other currencies.

Other stumbling AI stock have hit expectations of copper demand.

Hynes added that "Sentiment was also affected by the drop in AI stocks."

This week, shares in Asian 'chipmakers', who were among this year’s big winners from the AI-driven rally, have been slashed amid concerns about valuations before crucial earnings by big tech companies.

Copper's value was boosted due to the AI infrastructure construction, for which it is a vital commodity.

Aluminium gained 0.43% among other LME metals. Zinc dipped by 0.06%. Lead dipped by 0.26%. Nickel gained 0.77%. Tin gained 1.3%.

On the SHFE, elsewhere, aluminium rose 0.95%. Zinc fell 0.22%. Nickel dipped 0.14 %. Lead increased 0.32%. Tin gained 0.66%. $1 = 6.7716 Chinese Yuan Renminbi (Reporting and editing by Ronojoy Mazumdar).

(source: Reuters)