Copper prices fell 0.8% on Wednesday, retreating from near-record highs on the London Metal Exchange after a six-day rally. This decline was triggered by traders reassessing U.S. interest rate prospects following Federal Reserve policy signals, with officials expressing concern over the inflation outlook. A stronger U.S. dollar, driven by expectations of further policy tightening, also pressured metal prices, making dollar-denominated commodities more expensive for international buyers.
The benchmark three-month copper on the LME was down 0.6% at $14,655 a ton in official open-outcry trading, after briefly touching $14,833, its highest since the record of $14,875 on September 10. Comex copper also hit a record peak of $6.83 per pound (equivalent to $15,057 a ton) on Tuesday before retreating on Wednesday. This downturn comes despite supportive factors such as robust demand in China ahead of public holidays and a premium on the LME cash copper contract, indicating a tighter market.
Analysts at RBC Capital Markets noted that buyers are willing to pay a premium for earlier metal delivery, reinforcing the narrative of a tighter market. However, the Federal Reserve's hawkish stance overshadowed these supply-side factors and robust demand signals from China, causing a pullback. Other industrial metals also saw declines, with LME aluminium slipping 0.2% to $3,258 a ton, zinc easing 0.5% to $3,892, and nickel losing 0.2% to $16,595.
Copper's daily range was $6.7955 to $6.9270, with the price currently at $6.7638, down 1.01% on the day. Despite the short-term selling pressure, copper maintains a bullish medium and long-term structure. Traders Union expert Anton Kharitonov believes the key support zone is $6.7235, and a break below this could accelerate further declines, advising caution until copper reclaims its short-term averages.
