Copper prices rise on hopes of a dovish Fed

The copper prices rose on Wednesday as investors bet the Federal Reserve won’t raise interest rates too quickly, allowing economic growth and demand for metals to continue to rise.

At 11:15 GMT, three-month copper on the London Metal Exchange (LME) was up 1.3% at $9,929 a tonne, after rising 0.8% the day before.

The Fed is expected to announce on Wednesday its plans to raise rates in March, focusing on fighting inflation.

“The mood in the markets has changed overnight and I think this is because most market traders believe that the Fed will act this afternoon, but not too much”, said Daniel Briesemann, an analyst at Commerzbank in Frankfurt.

“If the Fed acts dovish, the economy will continue to recover from its COVID low in 2020, and this supports overall metal demand”, he added.

The upbeat mood propelled stocks higher, while crude oil climbed back to recent seven-year highs on tensions between Russia and Ukraine.

Aluminum on the LME fell 0.3% to $3,083 a tonne, after rising 2.1% on Tuesday on fears tension between Russia and Ukraine will affect supply.

LME zinc was up 1% at $3,606.50 a tonne; lead was up 0.1% at $2,336; nickel rose 1.2% to $22,610; and tin rose 2% to $42,150.

With information from Reuters