(Bloomberg) — Copper resumed its rally that saw it hit an 11-month high this week, with the Federal Reserve’s signals that it will meet rate-cut expectations bolstering risk appetite and weakening the US dollar.
Most Read from Bloomberg
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 surged to a record of more than 500,000 since last week as investors increased bullish bets.
The US dollar extended losses after 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. analysts wrote 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,” the analysts, led by Lina Thomas, said.
Copper rose 1.6% to $9,067 a ton on the London Metal Exchange as of 10:01 a.m. in Shanghai. Other base metals were also higher, with aluminum gaining 0.9%.
Iron ore was up 0.6% to $106.40 a ton in Singapore, extending its rebound after it slumped below $100 a ton on Friday for the first time since August.
Most Read from Bloomberg Businessweek
©2024 Bloomberg L.P.