Copper prices advanced on Thursday after the Federal Reserve moderated expectations of more aggressive interest rate hikes in the future, reviving appetite for riskier assets.
The US central bank raised its benchmark overnight interest rate by half a percentage point on Wednesday, the biggest one-day hike in 22 years, to combat runaway inflation.
However, Fed Chairman Jerome Powell struck a less aggressive tone than some feared in his comments with reporters, saying the central bank is not “actively considering” a key rate hike of 75 basis points.
The Fed’s dovish stance led to a rebound in riskier trading in stocks and commodities, said Amelia Fu of Bank of China International (BOCI). “Risk sentiment is tentatively back after the Fed chair’s comments,” she noted.
At 1146 GMT, benchmark copper on the London Metal Exchange (LME) added 0.81% to $9,550 a tonne. However, the metal used in energy and construction was still on track for its third weekly drop.
Stocks of copper in LME-approved warehouses increased by 14,325 tons to 168,800 tons. Inventories have more than doubled since February, when they hit their lowest level since 2005.
In other base metals, aluminum on the LME was up 0.2% at $2,959 a tonne; zinc added 3%, to US$3,977; lead rose 0.9% to $2,302; tin fell 0.2% to $40,550; and nickel added 0.6% to US$30,455.