Copper prices climb higher on tech optimism and weaker dollar

Copper prices extended their gains for the third consecutive session on Tuesday, supported by a rally in stock markets, a weaker U.S. dollar, and expectations of stronger demand. The benchmark three-month copper contract on the London Metal Exchange (LME) rose 0.1% to $14,420 per metric ton, following a 1.1% increase on Monday. Ewa Manthey, a commodities strategist at ING, attributed the rise to optimism fueled by the tech sector's performance, which is expected to drive demand for copper in data centers and power infrastructure.

The rally in European and Asian stocks on Tuesday was spurred by a tech-driven surge that pushed the Nasdaq to a record close. Analysts predict that growth in the AI and defense sectors will increase copper demand by 50% by 2040, as the metal is essential for wiring and power in data centers. Despite the recent gains, LME copper has eased from its record high of $14,875 reached on September 10, though it remains up 16% for the year so far.

Trading volumes were thinner than usual due to the closure of the Shanghai Futures Exchange for China’s National Day holiday. The market will reopen on October 8, with investors awaiting the return of Chinese buyers. A weaker dollar index also provided support for industrial metals, making dollar-denominated commodities cheaper for buyers using other currencies.

Other metals saw mixed movements, with LME aluminum gaining 0.7% to $3,148 per ton, while nickel dropped 0.1% to $15,700. Zinc climbed 0.6% to $3,765 per ton, lead added 0.1% to $1,878, and tin rose 0.1% to $54,390.