Copper hits 3-week high as dollar rally pauses

LONDON — Copper hit a threeweek high on Monday as the dollar rally paused and the balance of supply and demand looked to stay relatively tight, while nickel climbed after posting its largest daily loss in two months on Friday.

The dollar remained mired near three-year lows as resurgent US wage inflation data failed to quell scepticism among investors about the currency’s outlook.

US payrolls on Friday showed wages growing at their fastest pace in more than eight years.

“The dollar is driving the market,” said Casper Burgering, an analyst at ABN Amro.

A weaker dollar makes dollarpriced metals cheaper for non-US investors.

Mr. Burgering also said that copper relative to other metals “is lagging, it’s up only 1% for the year. It’s undervalued because the fundamentals are really good for this year.”

London Metal Exchange (LME) copper closed up 1.8% at $7,169 a ton, having hit its highest since mid-January at $7,220, while nickel ended up 2.4% at $13,745 a ton, having plunged 4% on Friday.

Some of China’s stainless steel mills, major consumers of nickel, are losing money at current prices and have already wound down their operations ahead of the week- long Chinese Lunar New Year, broker Argonaut Securities said in a report. “We expect to see price weakness in nickel going forward,” the report read.

Stock markets were routed around the globe while bond yields climbed as resurgent US inflation raised the possibility central banks would tighten policy more aggressively than had been expected.

China is expected to report solid growth in January trade this week, moderating inflation and renewed bank lending, but the timing of the long Lunar New Year holidays will make it difficult to determine clear trends for at least another month.

Lead prices took a breather from Friday’s six- and- a- half year top, ending down 1% at $2,652. Indicating nearby tightness, cash lead traded at a $17.25 a ton premium to the three month price.

Indicating nearby tightness, LME data showed one entity holds 80-90% of zinc warrants, cash and “tom” positions. Zinc ended up 1.3% at $3,548.

Hedge funds and money managers cut their net “long” or buy position in COMEX copper in the week to Jan. 30, data showed.

Russian aluminum maker Rusal estimates that China’s winter capacity cuts will curb output by one million tons annually. Aluminum ended up 0.10% at $ 2,211.

Tin ended up 1.8% at $21,920.