Copper prices advanced on Thursday, extending their gains after the Federal Reserve’s decision provided some relief to the metal as the US dollar and short-term bond yields declined.
While the Fed held its interest rates unchanged, three Federal Open Market Committee members dissented in favour of a rate hike and Chair Warsh reiterated the commitment to bringing inflation back to target.
Although short-term yields receded, markets still expect interest rate hikes in the next few months, which could weigh to some extent on copper over the medium term.
Copper could also find support as Chinese policymakers pledged to accelerate fiscal spending on already-approved infrastructure projects during the remainder of the year, although there was no announcement of a large-scale stimulus package.
China’s refined copper imports also reached a nine-month high in June. Meanwhile, physical market conditions remain supportive with inventory outside the US at low levels. Concerns about potential US tariffs on refined copper attracted large volumes of the metal into the country, tightening availability elsewhere.
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