Copper gains as Fed rate hike odds drop to 18 percent
Copper prices saw a modest rise on Monday, gaining 0.19% as market expectations for a US interest rate hike in October diminished. The benchmark three-month copper contract on the London Metal Exchange (LME) climbed to $14,286 per metric tonne. Investors were reassessing the prospects of a less restrictive US monetary policy, which could boost demand for industrial metals like copper. However, gains were limited by a stronger US dollar, which makes dollar-denominated commodities more expensive for international buyers.
The likelihood of an October rate hike by the US Federal Reserve dropped to 18%, down from 64% just a week earlier, according to the CME FedWatch tool. This shift followed weaker-than-expected US jobs data released last week. Meanwhile, the US dollar index rose 0.53%, reaching a near 17-month high, partly due to concerns over French fiscal conditions and a weaker euro.
Support for copper also came from falling oil prices, which could ease inflationary pressures and improve the economic outlook for industrial commodities. Oil prices declined amid expectations of increased supply from the Middle East and the release of oil stocks by Group of Seven nations. Lower energy costs may reduce production expenses for industrial sectors and give central banks more flexibility in adjusting borrowing costs.
Elsewhere in the LME, aluminium prices fell 0.19%, marking a sixth consecutive daily decline and hitting a three-month low of $3,091.50 per tonne. The metal has lost over 18% of its value since reaching a four-year high in June, impacted by easing supply concerns and anticipated production increases in Indonesia. Zinc prices dropped 0.44%, while lead gained 0.3%, and nickel remained nearly unchanged, easing 0.01%. Tin advanced 0.24% during the session.