Copper price falls due to fear of inflation and recession

Copper prices extended their losses on Wednesday as accelerating inflation and the prospect of further interest rate hikes fueled concerns about the global economy and demand for metals, while a stronger dollar also weighed on the market.

At 10:15 GMT, three-month copper on the London Metal Exchange (LME) was down 0.9% at $7,356 a tonne, after falling 1.9% on Tuesday.

Data released on Wednesday showed British inflation hit a 40-year high, while a US Federal Reserve official on Tuesday spoke of the need for further rate hikes to contain inflation.

“What we are seeing is an environment where recession is imminent, but has not landed. We keep talking about recession and yet there is no recessionsaid Naeem Aslam of Ava Trade. “That weighs on sentiment and industrial metals are not going to do well in that climate.”.

The most traded November copper contract on the Shanghai Futures Exchange fell 1.1% to 62,120 yuan ($8,601.85) per tonne.

The dollar index, which makes metals priced on the greenback more expensive for buyers using other currencies, also weighed on confidence.

Aluminum on the LME fell 0.9% to $2,173 a tonne after further inflows of the metal into LME-licensed warehouses.

In other metals, nickel was down 0.1% at $21,850 a tonne; lead was down 1.4% at $1,984.50; zinc rose 0.1% to $2,866; and tin gained 0.2% to $19,480.

With information from Reuters