Copper resumed a rally that saw it hit an 11-month high this week, after the Federal Reserve’s signals on future rate cuts bolstered risk appetite and weakened the US dollar.
The metal has gained more than 10% over the past six weeks, boosted by supply risks, along with a generally more positive global economic outlook. Open-interest, or the number of outstanding contracts, for copper on the Shanghai Futures Exchange has soared to a record of more than 500,000 since last week as investors increased bullish bets.
The US dollar steadied following a decline on Wednesday, as Fed policymakers kept their outlook for three cuts this year and moved toward slowing the pace of reducing their bond holdings, suggesting they aren’t alarmed by a recent uptick in inflation. A weaker greenback makes commodities from copper to iron ore cheaper to other currency holders.
The copper market remains very tight, Goldman Sachs Group Inc. said in a note. “The combination of record low copper stocks, our expectation of peak mine supply next year, rapid green demand growth, and low price elasticity of both demand and supply will, in our view lead to copper scarcity pricing in 2025,” analysts led by Lina Thomas said.
Copper climbed 0.8% to $8,998.50 a ton on the London Metal Exchange by 11:35 a.m. local time, after rising as much as 1.8% earlier. Zinc rose 1.3% after Glencore Plc said it temporarily ceased operations at its McArthur River zinc and lead mine in northern Australia due to a cyclone.
Rainfall at the site this week exceeded a previous record set in 1974, according to a statement from Glencore. The company is monitoring flooding in the area and assessing impacts on its operations.
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