LONDON: A rebound in copper prices paused on Thursday as the dollar steadied after the Federal Reserve pushed back the potential interest rate cut to the end of the year.
Three-month copper on the London Metal Exchange (LME) was down 0.7% at $9,877.5 per metric ton by 1125 GMT.
It surged on Wednesday to above $10,000 after May U.S. inflation came in lower than expected, bolstering expectations of earlier rate cuts.
“Sentiment was bullish after the U.S. inflation data yesterday but then the Fed statement after the LME close suggested that there would only be one cut this year,” said Robert Montefusco with Sucden Financial.
Montefusco said profit taking over the last few weeks had weighed on prices and that $9,500 was a key support level.
“Prices will be rangebound until we get better numbers out of China market on the demand narrative,” he said.
Copper prices bounce ahead of US inflation data, Fed meet
Crucial indicators include purchasing managers’ index that gauges manufacturing activity of top metals buyer China and will be due at the end of month. Before that there will be China’s loan and total social financing that indicates credit availability for businesses.
The dollar steadied after the Fed held interest rates steady on Wednesday. A stronger dollar makes greenback-priced metals costlier for holders of other currencies.
Copper buyers are still not back to the market although prices have retreated 11% from an all-time high of $11,104.5 in May.
More copper was delivered to LME-registered warehouses in Taiwan and South Korea on Wednesday, as Chinese producers took advantage of high LME prices in May to export copper.
LME copper inventories have risen 22% to 127,343 tonnes over the last month.
American Dollar Exchange Rate